GBP / USD looks for a move above 1.3400

UOB Group currency strategists see that GBP / USD will attempt to move above the 1.3400 level on the short-term horizon.

Key Comments:

24 hour view: “While we expected GBP / USD to strengthen yesterday, we were of the opinion that ‘1.3360 is probably out of reach.’ The subsequent strength of the British pound exceeded our expectations as it rose to a high of 1.3396. However, the advance was short-lived as the pair tumbled to a low of 1.3265 before rising again. Churning price action has resulted in a mixed outlook despite weakened underlying tone suggesting that the British pound could lower and test the 1.3260 level. Next support at 1.3230 is unlikely to enter the scene. Resistance is at 1.3360 followed by 1.3400 “.

Next 1-3 weeks: “We have held a positive view on GBP / USD since last Tuesday (Nov 17, GBP / USD at 1.3210). In our latest analysis yesterday (Nov 23), we indicated that ‘bullish momentum has improved and a breakout of 1.3322 would shift focus to 1.3360 (followed by 1.3400)’. That being said, we do not anticipate the acceleration of price action as the pair surpassed 1.3322 and 1.3360 and peaked at 1.3396. However, the advance was short-lived as GBP / USD tumbled from the high. Despite the setback, it is too early to mark a short-term top. As long as the 1.3200 level is intact (unchanged from the ‘strong support’ level), there is a possibility, although not high, that GBP / USD will move above 1.3400. However, short-term overbought conditions could lead to a couple of days of consolidation first. Looking ahead, the next resistance level above 1.3400 is at the yearly high of 1.3481 ”.