Current price movements are likely part of a consolidation, likely between 1.2600 and 1.2720. The Pound Sterling (GBP) could rebound further, but any advance is unlikely to be able to break the major resistance at 1.2720, UOB Group FX strategists suggest.
GBP must not break below 1.2650 to continue falling
24-HOUR VIEW: “After GBP spiked to a high of 1.2710 on Monday and then pulled back, we indicated yesterday (Tuesday) that ‘the brief advance did not result in any increase in upward momentum.’ We held the view that GBP is likely to trade in a sideways range of 1.2615/1.2680. GBP then dipped close to the bottom of our expected range (low of 1.2616) before rebounding strongly, reaching a high of 1.2689. Upward momentum is building, and GBP could continue to rebound today. Given that conditions are approaching overbought levels, any advance is unlikely to be able to break above the major resistance at 1.2720. To keep the momentum going, GBP must not break below 1.2650, with minor support at 1.2665.”
1-3 WEEKS VIEW: “We highlighted yesterday (02 Jul, spot at 1.2645) that the current price movements are likely part of a consolidation phase. We held the view that GBP ‘is likely to trade between 1.2600 and 1.2720 for now.’ We continue to hold the same view.”