GBP/USD: Any advance is likely to be limited to a test of 1.3545 - UOB Group

There is room for Pound Sterling (GBP) to rebound further, but any advance is likely to be limited to a test of 1.3545. In the longer run, GBP is likely to trade in a range between 1.3395 and 1.3575, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is likely to trade in a range

24-HOUR VIEW: "The following are excerpts from our update yesterday: 'The current price movements still appear to be part of a range-trading phase. Today, we expect GBP to trade between 1.3450 and 1.3505.' We did not anticipate the spike in volatility, as GBP first fell sharply to 1.3417 before rebounding swiftly to a high of 1.3501. While there is room for GBP to rebound further, given that conditions are approaching overbought levels, any advance is likely to be limited to a test of 1.3545. The major resistance at 1.3575 is unlikely to come into view. Support is at 1.3475; a breach of 1.3450 would indicate GBP is not rebounding further."

1-3 WEEKS VIEW: "GBP soared last Friday. In our most recent narrative from Monday (25 Aug, spot at 1.3515), we indicated that 'while further GBP strength is not ruled out, it is currently unclear if there is enough momentum for it to reach 1.3595.' We also indicated that 'if GBP breaks below 1.3425, it would mean that it is likely to trade within a range instead of strengthening.' Yesterday, GBP dropped below 1.3425 and reached a low of 1.3417 before rebounding. Upward momentum has faded, and from here, we expect GBP to trade in a range between 1.3395 and 1.3575."