Considering the ongoing price action, Markets Strategist at UOB Group Quek Ser Leang assesses the outlook for GBP/USD.

Key Quotes

In our 3Q23 Quarterly Global Outlook published on 16 June 2023, when GBP/USD was trading at 1.2785, we highlighted that the crossover of the 21- and 55-week exponential moving averages in GBP/USD. We noted, “This could lead to GBP/USD rising to 1.3100 before the risk of a pullback increases”.

After trading below the short-term resistance level of 1.2850 for a few weeks, GBP/USD lifted off earlier this week, and yesterday (13 July 2023), it surged past our objective of 1.3100 (high of 1.3144). The strong boost in momentum suggests GBP/USD is unlikely to pullback. Instead, it is likely to continue to head higher towards the top of the weekly exponential moving average envelope. This major resistance level is currently at 1.3335. 

In order to maintain the strong buildup in momentum, GBP/USD should not break below the ‘breakout’ level of 1.2850 in the next month or so. However, the key support level is at the rising trendline, now at 1.2730. From the perspective of several months, the 55week exponential moving average (now at 1.2400) is unlikely to come under threat.