UOB’s Quek Ser Leang and Lee Sue Ann note a sharp opening rise in GBP/USD, with rapid upward momentum that could see the pair test 1.3505, while 1.3530 remains a key resistance. They highlight that recent downward pressure has eased and the Pound is likely to range between 1.3330 and 1.3530, with risks skewed toward a topside break if 1.3435/1.3415 holds.

Pound-Dollar eyes key resistance band

"24-HOUR VIEW: We expected GBP to “trade sideways between 1.3400 and 1.3460” last Friday. GBP then traded within a range of 1.3416/1.3461 and closed unchanged at 1.3430. Today, GBP rose sharply on the open. The rapid build-up in upward momentum could lead to GBP testing 1.3505. The major resistance at 1.3530 is likely out of reach. To sustain the build-up in momentum, GBP must hold above 1.3435, with minor support at 1.3455. "

"1-3 WEEKS VIEW: In our most recent narrative from last Tuesday (19 May, spot at 1.3435), we highlighted that the recent “downward pressure has eased,” and we held the view that GBP “is likely to range-trade between 1.3330 and 1.3530.” While GBP has been trading within the range, the build-up in short-term momentum has increased the risk of GBP breaking above 1.3530. On the downside, a break below 1.3415 (‘strong support’ level) would indicate that GBP is likely to continue to trade in a range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)