There appears to be enough momentum for Pound Sterling (GBP) vs US Dollar (USD) to rise further, but any advance is likely part of a higher 1.2480/1.2600 range. In the longer run, sharp increase in momentum is likely to lead to further GBP strength; the levels to watch are 1.2600 and 1.2655, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Increase in momentum is likely to lead to further GBP strength

24-HOUR VIEW: "Following Wednesday’s price movements, we noted yesterday (Thursday) that 'there has been no increase in either downward or upward momentum.' We expected GBP to 'trade in a range between 1.2390 and 1.2490.' Instead of trading in a range, GBP surged and closed on a strong note at 1.2569 (+0.99%). While there appears to be enough momentum for GBP to rise further today, deeply overbought conditions suggest any advance is likely part of a higher 1.2480/1.2600 range. In other words, GBP is unlikely to break clearly above 1.2600. The major resistance at 1.2655 is also unlikely to come into view."

1-3 WEEKS VIEW: "One week ago (09 Feb, spot at 1.2440), we indicated that 'for the time being, GBP is likely to trade in a 1.2310/1.2550 range.' After trading in a range for several days, GBP surged and broke above 1.2550 yesterday, reaching a high of 1.2569. There has been a sharp increase in momentum, and we expect GBP to strengthen further. The levels to watch are 1.2600 and 1.2655. To sustain the momentum, GBP must remain above the ‘strong support’ level, currently at 1.2450."

Source: Fxstreet