Rebound in Pound Sterling (GBP) has scope to extend but is unlikely to break clearly above 1.3525. In the longer run, GBP is expected to continue range-trading; a narrower range of 1.3400/1.3525 is likely sufficient to contain price movements, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
GBP is expected to continue range-trading
24-HOUR VIEW: “Yesterday, we held the view that GBP ‘may continue to decline toward 1.3400.’ However, we pointed out that ‘based on the current momentum, a clear break below this level appears unlikely.’ The subsequent price movements did not turn out as expected, as after dropping to a low of 1.3417, GBP rebounded strongly to a high of 1.3489. The strong rebound has scope to extend, but this time around, based on the current momentum, a clear break above the major resistance at 1.3525 is unlikely. Note that there is another resistance level at 1.3500. On the downside, support levels are at 1.3460 and 1.3435.”
1-3 WEEKS VIEW: “Our most recent narrative was from one week ago (30 Sep, spot at 1.3435), in which we stated that GBP ‘is likely to trade in a range between 1.3360 and 1.3525.’ We continue to expect range-trading, but a narrower range of 1.3400/1.3525 is likely sufficient to contain the price movements for now.”
