British Pound has room to extend overbought rally against US Dollar – UOB

With GBP/USD having surged as Sterling outpaced its major peers, UOB strategists Quek Ser Leang and Lee Sue Ann judge short-term conditions to be overbought. They anticipate intraday consolidation within a narrow range, while their 1–3 week outlook leaves room for further gains towards higher resistance. Only a break below the revised strong support levels would invalidate that upside view.

Sterling consolidates as upward trend holds

"24-HOUR VIEW: We did not expect the sharp rise that sent GBP to a high of 1.3409 (we had expected range-trading). The sharp rise appears to be overdone, and instead of continuing to advance today, GBP is more likely to consolidate between 1.3340 and 1.3410."

"1-3 WEEKS VIEW: Last Friday (16 Oct, spot at 1.3270), we indicated that GBP “could edge higher toward 1.3315.” After GBP soared to a high of 1.3371, we highlighted on Monday (19 Oct, spot at 1.3325) that “upward momentum continues to increase, and GBP could rise toward 1.3405 next.” While our directional view was correct, we did not quite expect GBP to reach 1.3405 so soon, as it soared to a high of 1.3409 during the NY session yesterday. Short-term conditions are overbought after the rapid rise, but there is scope for GBP to rise to 1.3440 next. Overall, only a breach of 1.3300 (‘strong support’ level previously at 1.3260) would mean that GBP is not rising further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)