In the opinion of UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, GBP/USD needs to clear the 1.2450 region to allow for extra gains in the near term.

24-hour view: “The sharp snap back that sent GBP soaring to a high of 1.2424 yesterday came as a surprise (we were expecting GBP to drop further). While GBP could continue to rise and break above 1.2450, overbought conditions suggest it might not be able to hold above this level, and the next resistance at 1.2500 is unlikely to come under threat. On the downside, a break of 1.2365 (minor support is at 1.2390) would indicate that GBP is not strengthening further.”

Next 1-3 weeks: “Yesterday (03 Apr, spot at 1.2310), we held the view that GBP ‘is not strengthening further’ and we expected it to trade in a range of 1.2190/1.2380. We did not anticipate the sharp bounce that sent GBP soaring above 1.2380 (high has been 1.2424). Upward momentum is building again but GBP has to break clearly above the major resistance at 1.2450 before a sustained rise is likely. The chances of a clear break of 1.2450 will remain intact as long as GBP stays above 1.2330 in the next few days. Looking ahead, the next resistance level above 1.2450 is at 1.2550.”