- UOB Group analysts predict that GBP/USD could experience further gains and potentially reach the 1.2900 region in the near term.
- The GBP/USD pair has shown signs of being severely overbought, but it managed to break above the 1.2790 resistance level, reaching a high of 1.2789. However, further upside movement may be limited, and a breach of support levels could indicate a halt in the GBP’s strength.
- The projected movement of GBP/USD has implications for South Africa’s economy, particularly in industries related to international trade and finance. Stakeholders in South Africa should closely monitor these developments as they can influence import-export activities, investment decisions, and overall market sentiment
According to economists Lee Sue Ann and markets strategist Quek Ser Leang from UOB Group, the GBP/USD currency pair could experience further gains and potentially revisit the 1.2900 region in the coming weeks. These projections have significant implications for South Africa’s economy and its stakeholders.
In the short term, the GBP/USD pair was expected to break above the 1.2700 level, as highlighted by analysts yesterday. The analysts also noted that the next major resistance at 1.2790 would be unlikely to come into view. However, the GBP surprised market participants by accelerating upwards and coming within one pip of the 1.2790 resistance level, reaching a high of 1.2789. As the currency remains severely overbought, it is improbable that it will challenge the next resistance at 1.2850. Traders should be aware that a breach of the 1.2710 level (with minor support at 1.2750) indicates that the GBP is not likely to rise further.
Looking ahead to the next 1-3 weeks, UOB Group analysts maintained their view that the GBP would continue to strengthen. They had previously identified the 1.2790 level as the next significant target. While their view was accurate, they did not anticipate the rapid ascent of the GBP towards 1.2790 (reaching a high of 1.2789). The current market conditions indicate that the currency pair is severely overbought. However, it would only be considered a sign of the GBP’s strength dissipating if it falls below the 1.2630 level (with ‘strong support’ previously observed at 1.2560). On the upside, the next target for the GBP/USD pair is set at 1.2900.
Relevance to South Africa
The projected movement of the GBP/USD pair holds significance for South Africa’s economy, particularly for industries involved in international trade and finance. As a major global player in these sectors, South Africa’s businesses and investors need to stay informed about fluctuations in the GBP/USD exchange rate. The anticipated gains in the GBP could have implications for import and export activities, investment decisions, and overall market sentiment. Monitoring these developments will enable stakeholders in South Africa to make informed decisions and adapt their strategies accordingly.
In conclusion, UOB Group analysts predict that the GBP/USD pair has the potential to advance and reach the 1.2900 region in the near term. However, the currency pair currently faces overbought conditions, and a breach of support levels would indicate a shift in the market dynamics. South African businesses and investors should closely monitor these developments as they can impact various aspects of the economy, including trade and investment.