In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, GBP/USD’s upside could retarget the 1.2270 area in the short term.
24-hour view: “We highlighted last Friday that ‘there is room for the weakness in GBP to extend to 1.1850 before stabilization is likely’. While GBP subsequently dropped to a low of 1.1846, it reversed and rocketed to a high of 1.2100. GBP extended its advance in early Asian trade and it could continue to rise even though the resistance at 1.2200 is likely out of reach today (there is another resistance at 1.2160). On the downside, any pullback is unlikely to challenge the support at 1.2010 (minor support is at 1.2060).”
Next 1-3 weeks: “Our view from last Friday (06 Jan, spot at 1.1915) for ‘further GBP weakness’ was proven incorrect quickly as it blew above our ‘strong resistance’ of 1.2020 (high of 1.2100). While the rapid rise appears to be running ahead of itself, GBP could rise further but it remains to be seen if it can build enough momentum to reach 1.2270. On the downside, a break of 1.1950 would indicate that GBP is not strengthening further.”