In light of recent price action, the pair GBP / USD could hit the 1.3960 level in the coming weeks, suggest currency strategists at UOB Group.
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24 hour view: “Our expectation of GBP / USD ‘moving sideways’ was incorrect as it spiked to 1.3909 before the close on a firm tone. While overbought, the strong momentum to the upside suggests there is room for the advance of the GBP / USD may test 1.3930. For today, the next resistance at 1.3960 is unlikely to enter the scene. On the downside, a breakout of 1.3835 (minor support is at 1.3865) would indicate that current upward pressure has eased. . “
Next 1-3 weeks: “We highlighted last Wednesday (July 7, GBP / USD at 1.3800) that ‘the downside momentum is starting to build, but GBP / USD has to close below 1.3735 before a sustained decline can be expected’ As GBP / USD struggled to decline, we highlighted on Friday (July 9, GBP / USD at 1.3790) that ‘although there are still chances of GBP / USD closing below 1.3735, the odds of such a move have diminished.’ That said, we were not expecting the subsequent sharp rise in GBP / USD which sent it a high of 1.3909. The rapid rise has shifted risk to the upside and GBP / USD could advance to 1.3960. At this point, the prospect of a rise Sustained above this level is not high. The upside risk is considered intact as long as GBP / USD does not move below the “strong support” level at 1.3800. “
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