Pound Sterling (GBP) has likely entered a 1.3500/1.3585 consolidation phase. In the longer run, outlook for GBP remains positive, and it may rise to 1.3620; the chances of it reaching 1.3660 this time around are more limited, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Outlook for GBP remains positive

24-HOUR VIEW: "After GBP rose more than expected two days ago, we indicated the following yesterday: 'We underestimated the upward momentum, as GBP soared above 1.3555, reaching a high of 1.3585. Strong momentum is likely to outweigh the overbought conditions, and GBP may test the major resistance at 1.3620 today. It remains to be seen if it can break and hold above this level. To sustain the momentum, GBP must hold above 1.3530.' Our assessments were incorrect, as after edging to a high of 1.3594, GBP fell sharply to 1.3521. Upward momentum has faded, and GBP has likely entered a consolidation phase. Today, we expect GBP to trade in a range of 1.3500/1.3585."

1-3 WEEKS VIEW: "We have maintained a positive GBP stance since late last week (see annotations in the chart below). Tracking the price movements, we indicated yesterday (14 Aug, spot at 1.3580) that 'the outlook for GBP remains positive, and it may rise to 1.3620.' However, we pointed out that 'the chances of it reaching 1.3660 this time around are more limited.' We also pointed out that 'only a breach of 1.3485 (‘strong support’ level) would indicate that GBP is not rising further.' We did not quite anticipate the sharp pullback that reached a low of 1.3521. Nonetheless, we will maintain our view for now as long as 1.3485 is intact."