The exchange rate for GBP/USD is encountering upward pressure but lacks the momentum to breach the significant resistance level at 1.3570. Analysts from UOB Group, including Quek Ser Leang and Peter Chia, indicate that while the risk for the Pound Sterling remains tilted to the upside, the current momentum does not suggest a clear breakout above this critical threshold.
Throughout the previous trading session, GBP/USD exhibited a mixed performance. After a dip to a low of 1.3402, the currency pair staged a robust rally, briefly surpassing the resistance at 1.3505. Yet, analysts caution that the market is currently in an overbought state, making a sustained advance above 1.3525 unlikely in the near term. They highlight that firm support is present at 1.3460, with additional minor support at 1.3480.
Short-Term Outlook for GBP/USD
Looking ahead, the analysts noted that the near-term bias remains positive, pointing to the potential for GBP to continue trading within a range. They had previously stated that while the immediate outlook suggested a tilt towards 1.3505, there was uncertainty regarding the strength of the upward momentum. In a notable move, GBP reached a high of 1.3507 yesterday, reinforcing the potential for further gains. However, the analysts reiterated that without a strong enough push, GBP/USD may struggle to break above the significant resistance at 1.3570.
As long as GBP maintains a position above 1.3430, the upside bias is expected to persist. This critical support level will be closely monitored by traders as they assess the currency’s trajectory in the coming days.
Market Influences and Economic Data
The current trading environment for GBP/USD is influenced by various factors, including upcoming economic data releases. Analysts are particularly focused on the United Kingdom’s Retail Sales figures for December, scheduled for release by the Office for National Statistics on January 19, 2024, at 07:00 GMT. This data is anticipated to provide further insights into consumer behavior and economic health, potentially impacting the Pound’s performance.
Additionally, traders are awaiting key economic indicators from the United States, such as the PCE Price Index and the Q3 GDP figures, which could also affect the dynamics between GBP and USD. As the market adjusts to these economic signals, GBP/USD will likely continue to navigate through the established trading range, with traders keeping a close watch on any developments that could shift momentum.
In summary, while GBP/USD is currently facing resistance at 1.3570, the overall sentiment remains cautiously optimistic. Market participants will be keen to see if upcoming economic data can provide the necessary impetus for a breakout or if the currency pair will remain range-bound in the near future.
