Instead of rising further, the Pund Sterling (GBP) is more likely to trade in a range between 1.2650 and 1.2705. Slowdown in momentum suggests a slim chance of GBP weakening to 1.2600, UOB Group strategists note.
GBP is likely to trade between 1.2650 and 1.2705
24-HOUR VIEW: “Yesterday, we were of the view that GBP ‘could dip towards 1.2600 before the risk of a rebound increases.’ However, after dipping to a low of 1.2633, GBP rebounded strongly, reaching a high of 1.2698. The robust rebound appears to be overextended, and instead of rising further, GBP is more likely to trade in a range today, probably between 1.2650 and 1.2705.”
1-3 WEEKS VIEW: “We highlighted yesterday (24 Jun, spot at 1.2640) that GBP ‘is likely to continue to weaken to 1.2600.’ We also highlighted that ‘only a breach of 1.2705 would mean that the weakness in GBP has stabilised.’ GBP subsequently rebounded strongly, reaching a high of 1.2698. While our ‘strong resistance’ level at 1.2705 has not been breached yet, the slowdown in momentum suggests a slim chance of GBP weakening to 1.2600. Looking ahead, if 1.2705 is breached, it would indicate that the weakness in GBP from early last week (see annotations in the chart below) has stabilised and GBP could trade in a range.
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