Economist Lee Sue Ann and Markets Strategist Quek Ser at UOB Group suggest GBP/USD is now seen trading within the 1.2085-1.2240 band in the next weeks.
Key Quotes
24-hour view: We expected GBP to trade in a range of 1.2085/1.2155 yesterday. GBP dipped to a low of 1.2090 before staging a surprising sharp rise to 1.2175. While upward momentum has not improved much, there is room for GBP to test 1.2205. Today, the chance of GBP breaking clearly above this level is not high. If GBP breaks below 1.2120 (minor support is at 1.2135), it would mean that the current upward pressure has faded.
Next 1-3 weeks: We noted yesterday (30 Oct, spot at 1.2115) that downward momentum had waned somewhat, but “there is still room for GBP to test 1.2040.” GBP then rose to a high of 1.2175. While our ‘strong resistance’ level of 1.2180 has not been clearly breached, downward momentum has dissipated. GBP has moved into a range-trading phase and is likely to trade between 1.2085 and 1.2240 for the time being.