GBP/USD’s upward bias could extend to the 1.2680 region in the short-term horizon, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: Yesterday, GBP soared to a 1-month high of 1.2625 and then closed on a strong note at 1.2612 ( 0.80%). In view of the increased upward momentum, GBP is likely to rise further. However, barring a surge in momentum, the major resistance at 1.2680 is likely out of reach today. The upside risk is intact as long as GBP stays above 1.2540 (minor support is at 1.2570).

Next 1-3 weeks: We turned positive in GBP last Friday (09 Jun, spot at 1.2555) but we indicated that “it remains to be seen if it has enough momentum to revisit last month’s high near 1.2680”. After GBP dropped sharply to 1.2487, we highlighted yesterday (13 Jun, spot at 1,2515) that “upward momentum is beginning to fade and a break below 1.2450 would indicate that 1.2680 is not coming into view”. We did not quite expect the strong bounce to 1.2625 in NY trade. The boost in momentum suggests that 1.2680 could come into view. On the downside, a breach of 1.2515 (‘strong support’ level previously at 1.2450) indicates the build-up in momentum has faded.