UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia note GBP/USD could extend the consolidative phase in the next few weeks.

Key Quotes

24-hour view: We highlighted yesterday that “the sharp rebound in GBP has room to extend, but any advance is unlikely to reach 1.2200.” We added, “Support is at 1.2110, followed by 1.2080.” Our view was not wrong. GBP dipped to a low of 1.2108 in London trade and then rose quickly to a high of 1.2196. Upward momentum has increased, albeit not by all that much. Today, GBP could rise above 1.2230, but it is unlikely to be able to maintain a foothold above this level. The major resistance at 1.2270 is unlikely to come under threat. Support is at 1.2160, followed by 1.2130. 

Next 1-3 weeks: Our update from yesterday (05 Oct, spot at 1.2140) is still valid. As highlighted, the recent downward momentum buildup has faded. The current price movement is likely part of a range-trading phase, and GBP is likely to trade in a range between 1.2030 and 1.2270 for now.