According to the currency strategists at UOB Group, the outlook for GBP / USD remains positive and could extend the rally towards the 1.4290 level In the next weeks.
Key Comments:
24 hour vision: “Our expectation of a stronger GBP was correct, but we underestimated the strength of the rally as it rose to 1.4220 (yesterday we are of the opinion that 1.4200 is likely out of reach). The move is deeply overbought, but there is room for the British pound to test the main resistance at 1.4235 first before pulling back. A move to the next major resistance at 1.4290 would be a surprise. Support is at 1.4170 followed by 1.4140 “.
Next 1-3 weeks: “We have been keeping a positive outlook on GBP / USD since the beginning of last week. After the pair retreated sharply from 1.4167, we noted on Monday (May 17, GBP / USD at 1.4085) that the pair ‘has to close above 1.4160 before a sustained advance can be expected’. GBP / USD spiked to 1.4220 yesterday (May 18) before closing at 1.4189. The improvement in momentum indicates that the next upward movement has begun. A breakout of the main resistance at 1.4235 would shift focus to 1.4290. Overall, GBP / USD is expected to remain strong as long as it remains above 1.4100 (the ‘strong support’ level was at 1.4050 yesterday). “
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