Further upside momentum could lift GBP/USD to the 1.2900 region while above 1.2850, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: We did not anticipate the strong surge in GBP that sent it soaring to a high of 1.2850, one pip above last month’s high of 1.2849. The sharp and swift rise appears to be overdone, but with no signs of reversal just yet, GBP could rise to 1.2865 before the current strong upward pressure might ease. Today, 1.2900 is unlikely to come into view. Support is at 1.2805, followed by 1.2780. 

Next 1-3 weeks: Our most recent narrative was from last Wednesday (05 Jul, spot at 1.2715) wherein GBP “is likely to consolidate and trade in a range of 1.2630/1.2800.” Last Friday, GBP jumped to a high of 1.2850. While the price actions have shifted the risk to the upside, GBP must break and stay above 1.2850 before an advance to 1.2900 is likely. The upside risk is intact as long as GBP stays above 1.2735 (‘strong support’ level).