GBP/USD bullish above 1.3380 – UOB

In opinion of FX Strategists at UOB Group, Cable’s stance should shift to bullish from the current neutral on a close above 1.3380.

Key Quotes

24-hour view: “While we expected a higher GBP yesterday, we did not anticipate a break above the strong 1.3280 resistance. However, GBP edged above this level and touched a high of 1.3289 before closing on a strong note. The up-move appears to have scope to extend higher to test the next resistance at 1.3335/40, the high seen earlier this month. At this stage, a clear break above this level seems unlikely (next resistance is at 1.3380). On the downside, only a move back below 1.3220 would indicate that a short-term top is in place (minor support at 1.3250)”.

Next 1-3 weeks: “The ease of which GBP took out the strong resistances at 1.3240 and 1.3280 was unexpected. Despite the relatively strong gains, it is too early to expect a sustained up-move and the neutral phase that started 3 weeks ago is deemed as still intact. That said, the immediate bias it tilted to the upside but only a clear break above 1.3380 would indicate the start of a bullish phase. On a shorter-term note, 1.3335/40 is already a strong level. On the downside, only a move back below 1.3170 would indicate that the immediate upward pressure has eased”.