Overbought advance in Pound Sterling (GBP) could extend against US Dollar (USD), but a clear break above 1.3385 is unlikely. In the longer run, GBP has likely entered a 1.3285/1.3425 range trading phase, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Overbought advance in GBP might extend

24-HOUR VIEW: "While we continued to expect GBP to trade in a range yesterday, we indicated that 'the firmer underlying tone suggests a higher range of 1.3270/1.3320.' We did not anticipate GBP to rise sharply to a high of 1.3369. While overbought, the advance could extend to 1.3385. GBP is unlikely to break clearly above this level. On the downside, support levels are at 1.3325 and 1.3310."

1-3 WEEKS VIEW: "We have held a negative GBP view since early last week. Last Friday, GBP dropped and almost reached our technical target at 1.3140 (low has been 1.3143) before rebounding. In our latest narrative from Monday (04 Aug, spot at 1.3275), we highlighted that 'the likelihood of GBP breaking clearly below 1.3140 has diminished considerably, but only a breach of 1.3355 (‘strong resistance’ level) would indicate that the GBP weakness has stabilised.' Yesterday, GBP breached 1.3355. GBP has likely entered a range trading phase. From here, we expect GBP to trade between 1.3285 and 1.3425."