GBP/USD now seen within a consolidative range – UOB

GBP/USD is now expected to trade within the 1.2030-1.2270 range in the next few weeks, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: We did not anticipate the sharp swings yesterday as GBP dropped briefly to 1.2039 and then rebounded strongly to a high of 1.2177 (we were expecting it to consolidate). The strong rebound has room to extend, but as upward momentum has not improved much, any advance is unlikely to reach 1.2200 (there is another resistance at 1.2170). Support is at 1.2110, followed by 1.2080. 

Next 1-3 weeks: Our latest narrative was from two days ago (03 Oct, spot at 1.2090). We highlighted that “the recent GBP weakness has resumed, likely towards 1.2000.” Yesterday, GBP dropped to 1.2039 and then rebounded strongly to take out our ‘strong resistance’ level of 1.2160. The breach of the ‘strong resistance’ indicates that the downward momentum buildup has faded. The current price movement is likely part of a range-trading phase, probably between 1.2030 and 1.2270.