Likely to range-trade between 1.3470 and 1.3535 – UOB Group

Pound Sterling (GBP) is likely to range-trade, most likely between 1.3470 and 1.3535. In the longer run, GBP could rise to 1.3590; the odds of a continued rise above this level are not high.

GBP might rise to 1.3590

24-HOUR VIEW: “GBP dropped to a low of 1.3415 on Monday and then rebounded sharply. Yesterday, when GBP was at 1.3535 in the early Asian session, we highlighted that ‘there is a chance for the sharp rise in GBP to test 1.3560 before levelling off’. We also highlighted that ‘based on the current momentum, we do not expect 1.3590 to come into view’. GBP then rose to 1.3567 but instead of levelling off, it pulled back to a low of 1.3492. Upward momentum has slowed with the pullback, and today, we expect GBP to range-trade, most likely between 1.3470 and 1.3535.”

1-3 WEEKS VIEW: “We revised our GBP view to positive yesterday (06 Jan, spot at 1.3535), indicating that GBP ‘could rise to 1.3590’. However, we pointed out that ‘the odds of a continued rise above this level are not high’. GBP subsequently rose to 1.3567 before staging a relatively sharp pullback. While upward momentum has slowed somewhat, we will maintain the same view as long as GBP holds above 1.3455 (no change in ‘strong support’ level).”