British Pound: Can the overbought rally extend further against the US Dollar? – UOB

Sterling’s outperformance against major peers drove a surge in GBP/USD, leaving short-term conditions overbought, according to UOB strategists Quek Ser Leang and Lee Sue Ann. They anticipate a narrow consolidation range during the day. Over 1–3 weeks, however, further advances towards higher resistance remain possible, with that outlook invalidated only if the pair breaks below the revised strong support levels.

Can Sterling extend its advance after a pause?

"24-HOUR VIEW: We did not expect the sharp rise that sent GBP to a high of 1.3409 (we had expected range-trading). The sharp rise appears to be overdone, and instead of continuing to advance today, GBP is more likely to consolidate between 1.3340 and 1.3410."

"1-3 WEEKS VIEW: Last Friday (16 Oct, spot at 1.3270), we indicated that GBP “could edge higher toward 1.3315.” After GBP soared to a high of 1.3371, we highlighted on Monday (19 Oct, spot at 1.3325) that “upward momentum continues to increase, and GBP could rise toward 1.3405 next.” While our directional view was correct, we did not quite expect GBP to reach 1.3405 so soon, as it soared to a high of 1.3409 during the NY session yesterday. Short-term conditions are overbought after the rapid rise, but there is scope for GBP to rise to 1.3440 next. Overall, only a breach of 1.3300 (‘strong support’ level previously at 1.3260) would mean that GBP is not rising further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)