GBP/USD could extend the rebound to the 1.2580 zone in the near term, note UOB Group’s Markets Strategist Quek Ser Leang and Economist Lee Sue Ann.
24-hour view: Yesterday, we held the view that “the outsized rally is severely overstretched, but GBP could rise to 1.2530 before levelling off.” Our view was incorrect. Instead of rising to 1.2530, GBP dropped to a low 1.2404. GBP appears to have entered a consolidation phase, and it is likely to trade in a range of 1.2380/1.2480 today.
Next 1-3 weeks: We highlighted yesterday (15 Nov, spot at 1.2490) that GBP is likely to continue to advance, but it has to break clearly above 1.2580 before a further sustained rise is likely. We did not quite expect GBP to pullback to a low of 1.2400. That said, we continue to hold the same view. Only a breach of 1.2350 (no change in ‘strong support’ level from yesterday) would indicate that GBP is not advancing further.