Pound Sterling (GBP) is expected to trade in a sideways range of 1.2720/1.2785. In the longer run, momentum is beginning to slow; GBP has to break and hold above 1.2810, or the chance of a rise to 1.2850 will diminish quickly, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.
Momentum is beginning to slow
24-HOUR VIEW: “Yesterday, we noted ‘a slight increase in momentum.’ We were of the view that GBP ‘may edge higher, but as momentum is not strong for now, any advance is unlikely to break above 1.2810.’ Our view did not turn out, as GBP fluctuated between 1.2716 and 1.2782, closing at 1.2751 (-0.17%). The price action did not result in any increase in either downward or upward momentum. Today, we expect GBP to trade sideways, most likely in a range of 1.2720/1.2785.”
1-3 WEEKS VIEW: “We have a held positive GBP view since early this week. After GBP traded in a range for a few days, we indicated yesterday (11 Dec, spot at 1.2775) that ‘upward momentum is beginning to slow, and GBP has to break above and hold above 1.2810 within these 1 to 2 days, or the chance of a rise to 1.2850 will diminish quickly.’ We continue to hold the same view as long as 1.2700 (no change in ‘strong support’ level) is not breached. Looking ahead, a breach of 1.2700 would indicate that GBP may trade in a range for a period.”
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