GBP/USD: Room for gains – OCBC

Pound Sterling (GBP) extended its run higher, to more than 3-year high as activity, inflation and PMI services data surprised to the upside. Pair was last at 1.3565, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Further upside likely

"Elsewhere, a softer USD trend also helped. We had earlier said the GBP performance has been surprisingly resilient amongst the DM FX and remains so. This can be attributed to better-than-expected growth momentum (reflected in recent GDP, retail sales, PMI data), less dovish than expected BoE rhetoric as well as the US-UK trade deal (removes uncertainty element)."

"We also reckon the USD diversification/reallocation flows can also benefit GBP amongst other reserve FX. Daily momentum on daily chart intact while RSI rose. Further upside likely. Next resistance at 1.3660, 1.3750 levels. Support at 1.3450 (previous double top, now turned support), 1.3330 (21 DMA)."