In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the upside momentum in GBP/USD is expected to accelerate once 1.2550 is cleared.
24-hour view: “We highlighted yesterday that despite the advance in GBP to 1.2516, there was no significant increase in momentum. We added, ‘instead of strengthening further, GBP is more likely to trade sideways in 1.2420/1.2520 range’. Our view was not wrong even though GBP traded in a narrower range than expected (1.2437/1.2500). The underlying tone has firmed somewhat, and today there is room for GBP to edge above 1.2520. However, a clear break of the major resistance at 1.2550 is unlikely. Support is at 1.2470, followed by 1.2435.”
Next 1-3 weeks: “We highlighted yesterday (27 Apr, spot at 1.2470) that in order for GBP to advance in a sustained manner, it has to break and stay above 1.2550. We continue to hold the same view. The likelihood of GBP breaking clearly above 1.2550 will remain intact as long as it does move below 1.2390 (‘strong support’ level was at 1.2370 yesterday). Looking ahead, the next resistance level above 1.2550 is at 1.2665.”
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