Further upside momentum could lift GBP/USD to the 1.2390 region in the near term, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We did not expect the strong advance in GBP to 1.2300 (we were expecting GBP to range trade). Upward momentum has improved, albeit not by much. While GBP is likely to strengthen further, it is unlikely to maintain a foothold above 1.2330 (next resistance is at 1.2390). Support is at 1.2260, a breach of 1.2230 would indicate that GBP is not advancing further.”

Next 1-3 weeks: “We have held a positive GBP view for more than a week now. Yesterday (17 Jan, spot at 1.2205), we indicated that while there is room for GBP to advance further, the likelihood of a sustained rise above 1.2330 is not high. GBP rose to a high of 1.2300 in NY trade before closing on a firm note at 1.2287 ( 0.75%). Upward momentum has improved, albeit not much. From here, we expect GBP to edge higher to 1.2390. On the downside, a breach of 1.2170 (‘strong support’ level previously at 1.2125) would indicate that the current upward pressure has eased.”