GBP/USD may have just enough momentum to test 1.2975.

While overbought, Pound Sterling (GBP) may have just enough momentum to test 1.2975 vs US Dollar (USD) before the risk of a pullback increases. In the longer run, uptrend in GBP appears to be ready to consolidate or pause; a break below 1.2855 will indicate that upward momentum has eased, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Uptrend in GBP appears to be ready to consolidate or pause

24-HOUR VIEW: “Yesterday, we held the view that GBP ‘is likely to trade in a range between 1.2845 and 1.2930.’ Our view was incorrect, as GBP soared, reaching a high of 1.2966. While conditions are overbought, GBP may have just enough momentum to test the key resistance at 1.2975 before the risk of a pullback increases. The next resistance at 1.3000 is unlikely to come under threat. Support levels are at 1.2920 and 1.2900.”

1-3 WEEKS VIEW: “We revised our outlook for GBP to positive early last week. After tracking the rise for more than a week, we highlighted yesterday (11 Mar, spot at 1.2875) that “upward momentum is slowing, and a breach of 1.2830 (‘strong support’ level) would mean that 1.2975 is out of reach this time around.” Although GBP subsequently rose to 1.2966, there has been no further increase in momentum. Overall, the uptrend appears to be ready to consolidate or pause, and a break below 1.2855 (‘strong support’ level was at 1.2830 yesterday) would indicate that the current upward momentum has eased. Looking ahead, should GBP break above 1.2975, there is another major resistance at 1.3000.”