Downward momentum has faded; outlook is unclear, and the Pound Sterling (GBP) could trade in a range between 1.2850 and 1.3055, UOB Group FX analysts Quek Ser Leang and Peter Chia note.
GBP can trade in a range between 1.2850 and 1.3055
24-HOUR VIEW: “GBP dropped sharply to 1.2835 on Wednesday, and then rebounded. Yesterday (Thursday), we highlighted that GBP ‘could retest the 1.2835 low before stabilisation is likely.’ Our view was incorrect, as GBP soared, reaching a high of 1.3009. GBP then pulled back from the high, closing at 1.2986. The pullback in overbought conditions indicates that instead continuing to advance, GBP is more likely to trade sideways between 1.2930 and 1.3010.”
1-3 WEEKS VIEW: “We shifted from a neutral to negative GBP stance yesterday (07 Nov, spot at 1.2890), indicating that “the breach of the 1.2900 support suggests GBP could continue to weaken.’ However, we pointed out that ‘there is a weekly support at 1.2800.’ We added, ‘To maintain the rapid buildup in momentum, GBP must remain below 1.3000.’ Our view was invalidated quickly, as GBP staged a strong rebound that broke above 1.3000 (high has been 1.3009). The buildup in downward momentum has faded. The rapid but short-lived swings have resulted in an unclear outlook. For now, GBP could trade in a range, likely between 1.2850 and 1.3055.”
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