There still seem to be room for GBP/USD to reach the 1.2580 zone in the near term, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
24-hour view: We indicated yesterday that “there is room for GBP to rise further, but any advance is likely to encounter solid resistance near last week’s high, near 1.2505.” We added, “In order to maintain the buildup in momentum, GBP must stay above 1.2420 (minor support is at 1.2440).” GBP stayed above the minor support of 1.2440 (low of 1.2448), rose, and broke above 1.2505 (high of 1.2518). Upward momentum has increased, albeit not by as much as we would like. That said, as long as GBP stays above 1.2460 (minor support is at 1.2480), it could continue to rise. Based on the current level of momentum, 1.2580 is likely out of reach for now (there is another resistance at 1.2545).
Next 1-3 weeks: Last Wednesday (15 Nov, spot at 1.2490), we highlighted that GBP “is likely to continue to advance, but it has to break clearly above 1.2580 before a further sustained rise is likely.” After GBP pulled back from 1.2506, we highlighted yesterday that GBP “has to break and stay above 1.2505 before an advance to 1.2580 can be expected.” While GBP broke above 1.2505 in NY trade (high of 1.2518), the price action only generated a mild increase in momentum. However, as long as 1.2420 (‘strong support’ level previously at 1.2350) is not breached, there is still a chance for GBP to rise to 1.2580.