GBP/USD: More likely to trade in a sideways range of 1.3680/1.3760 - UOB Group

Too early to expect a sizeable pullback; Pound Sterling (GBP) is more likely to trade in a sideways range of 1.3680/1.3760. In the longer run, outlook remains positive but GBP may consolidate for a couple of days first; the next technical objective is 1.3800, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Outlook remains positive

24-HOUR VIEW: "After GBP traded on a firm note after the open yesterday, we indicated that 'momentum is increasing, and GBP could strengthen toward 1.3720.' However, we noted that 'it is unclear whether the current momentum can carry GBP to 1.3750.' We did not anticipate the surge in momentum that sent GBP to a high of 1.3770. GBP eased from the high to close at 1.3726 (+0.45%). The rapid rise in GBP over the past few days seems overstretched, but given the strong underlying momentum, it is too early to expect a sizeable pullback. Today, we expect GBP to trade sideways at these higher levels, most likely in a range of 1.3680/1.3760."

1-3 WEEKS VIEW: "We turned positive on GBP yesterday (26 Jun, spot at 1.3680), indicating that it 'may rise to 1.3720, potentially 1.3750.' We also indicated that 'to sustain the buildup in momentum, GBP must hold above the 'strong support' level, currently at 1.3595.' We did not expect GBP to exceed 1.3750 so soon, as it soared to a high of 1.3770. GBP closed higher for the fourth straight day at 1.3726 (+0.45%). While GBP could continue to advance, overbought short-term conditions may lead to a couple of days of consolidation first. All in all, the outlook for GBP remains positive, and the next technical objective is 1.3800. We will maintain our view as long as the 'strong support' at 1.3610 (level was at 1.3595 yesterday) is not breached."