GBP/USD rally still has further legs – UOB

Cable is approaching the overbought area although further upside is not ruled out yet, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for GBP to trade sideways yesterday was wrong as it staged a surprisingly strong up-move and hit an overnight high of 1.3165. The subsequent strong daily closing in NY (1.3161) suggests there is scope for the rally to extend higher and while a move above the strong 1.3165/70 resistance would not be surprising, the prospect for a clear break of the next resistance at 1.3215 is low. On the downside, only a break below 1.3095 would indicate that a short-term top is in place (minor support is at 1.3125)”.

Next 1-3 weeks: “We have held the same view since last Tuesday (11 Sep, spot at 1.3025) wherein we expect the rebound in GBP to extend to 1.3170. After about a week, GBP finally touched a high of 1.3165 during overnight NY hours. While the advance in GBP is approaching overbought levels, there is no sign of weakness just yet and there is scope for further strength towards next major level of 1.3215. This is a relatively strong resistance and a break of this level would be a good indication that GBP could continue to advance in the coming days. On the downside, the ‘key support’ is currently at 1.3045, higher from 1.3000 previously”.