The British pound (GBP) could break above 1.2900, but may not be able to hold a foothold above this level, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.
Bears might try to test 1.2780
24-HOUR VIEW: “We did not anticipate GBP to break out yesterday as it posted its biggest one-day gain in four months (1.2862, +0.76%). We were expecting sideways trading. While GBP could rally further today and break above 1.2900, overbought conditions suggest it might not be able to hold a foothold above this level. The next resistance at 1.2950 is unlikely to come into play. On the downside, support levels are at 1.2845 and 1.2820.”
1-3 WEEK VIEW: “After holding a negative view on GBP since late last month, we turned neutral yesterday (Aug 13, spot at 1.2765), stating that ‘weakness since late last month has stabilised.’ We expected GBP to ‘trade between 1.2700 and 1.2850 for the time being.’ We did not expect GBP to break quickly above 1.2850 as it spiked to a high of 1.2873 in NY trading. Price action indicates that rather than trading in a range, GBP will likely bounce higher, potentially as high as 1.2950. However, it should be noted that 1.2900 is also a fairly strong resistance level. To maintain momentum, GBP must not break below 1.2780 (current ‘strong support’ level).”
Source: Fx Street
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