The British Pound (GBP) is likely to trade in a range, probably between 1.2890 and 1.2980. Longer term, GBP must break and hold below 1.2845 before a sustained decline can be expected, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.
Limited to a range between 1.2890 and 1.2980 for the moment
24-HOUR VIEW: “After the GBP fell sharply last Thursday, we highlighted on Friday that ‘The sharp drop appears to be overstated, and the GBP is unlikely to weaken further.’ We maintained the view that the GBP ‘is more likely to trade in a range, probably between 1.2860 and 1.2950.’ The GBP did not weaken further, but instead of trading in a range, it rose to 1.2980, then retreated to close at 1.2921. Today the price action provides no new clues, and we continue to expect the GBP to trade in. a range, probably between 1.2890 and 1.2980.”
1-3 WEEK VIEW: “Last Thursday, the GBP fell to a low of 1.2845. In our update last Friday (Nov 1, spot at 1.2900), we indicated that ‘Although there has been a build-up of momentum, the GBP must break and hold below 1.2845 before a sustained decline can be expected.’ We added, ‘The probability of GBP breaking clearly below 1.2845 will remain intact, as long as 1.2985 is not broken.’ In NY trading, GBP rose to 1.2980, then retreated. The bearish momentum has slowed, and the possibility of GBP breaking below 1.2845 has diminished. However, only a clear break above 1.2985 would indicate that. “the downside risk has disappeared.”
Source: Fx Street
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