The risk for Pound Sterling (GBP) remains on the upside; it is unclear whether momentum is strong enough to break above 1.3570, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Risk for GBP remains on the upside

24-HOUR VIEW: "Following GBP’s price action two days ago, we highlighted the following yesterday: 'There has been no shift in either downward or upward momentum, and we continue to expect range-trading today, most likely between 1.3400 and 1.3460'. GBP subsequently dipped to a low of 1.3402 before staging a surprisingly sharp rally that broke slightly above the major resistance at 1.3505 (high of 1.3507). While further GBP strength is not ruled out, deeply overbought conditions suggest a sustained break above 1.3525 is unlikely. The high seen earlier this month, near 1.3570, is not expected to come into view. On the downside, firm support is located at 1.3460, with minor support at 1.3480."

1-3 WEEKS VIEW: "We highlighted two days ago (21 Jan, spot at 1.3440) that 'the near-term bias is tilted to the upside toward 1.3505, but based on the current momentum, GBP may not break clearly above this level'. In a sudden move yesterday, GBP rallied to a high of 1.3507. While the price action suggests the risk for GBP remains on the upside, it is unclear for now whether upward momentum is strong enough to break above the significant resistance at 1.3570. The upside bias will remain intact as long as GBP holds above 1.3430 (‘strong support’ level previously at 1.3380)."