GBP/USD now targets 1.4280 – UOB

FX Strategists at UOB Group keep the neutral stance on Cable and they now expect a probable test of the 1.4280 region.

Key Quotes

24-hour view: “Expectation for sideway-trading was wrong as GBP rose past last week’s 1.4220 top to hit 1.4242. While overstretched, the current advance appears to have scope to extend further and test last month’s peak near 1.4280. At this stage, a clear break above this level seems unlikely (next resistance is at 1.4310 followed by the year-to-date high at 1.4346). On the downside, yesterday’s low near 1.4140 is expected to be strong enough to hold any intraday pullback (1.4190 is already quite a strong support)”.

Next 1-3 weeks: “While we have held a positive GBP view since last Thursday (22 Mar, spot at 1.4145), the resilience of the up-move came as a surprise. We noted that further strength is not ruled out but were of the view that it would “surprising if GBP can move above the February’s peak near 1.4280”. In view of the vastly improved upward momentum, the prospect for a move above this level has increased considerably. At this stage, the probability for further extension to the year-to-date high of 1.4346 is not high but it would continue to improve as long as 1.4110 is intact (key support previously at 1.4000). On a shorter-term note, 1.4140 is already a strong support”.