British Pound: Overbought rally still has upside scope against US Dollar – UOB

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD surged as Sterling outperformed major peers, though short-term conditions are now overbought. Intraday, they expect consolidation within a tight band, but the 1–3 week view still allows for further gains toward higher resistance, with downside invalidation only on a break of revised strong support levels.

Sterling advance pauses but trend intact

"24-HOUR VIEW: We did not expect the sharp rise that sent GBP to a high of 1.3409 (we had expected range-trading). The sharp rise appears to be overdone, and instead of continuing to advance today, GBP is more likely to consolidate between 1.3340 and 1.3410."

"1-3 WEEKS VIEW: Last Friday (16 Oct, spot at 1.3270), we indicated that GBP “could edge higher toward 1.3315.” After GBP soared to a high of 1.3371, we highlighted on Monday (19 Oct, spot at 1.3325) that “upward momentum continues to increase, and GBP could rise toward 1.3405 next.” While our directional view was correct, we did not quite expect GBP to reach 1.3405 so soon, as it soared to a high of 1.3409 during the NY session yesterday. Short-term conditions are overbought after the rapid rise, but there is scope for GBP to rise to 1.3440 next. Overall, only a breach of 1.3300 (‘strong support’ level previously at 1.3260) would mean that GBP is not rising further."