Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group now see GBP/USD navigating within the 1.2190/1.2380 range in the next few weeks.

24-hour view: “We highlighted that last Friday that ‘the chance of GBP breaking above 1.2400 is on the high side’. We added, ‘the next resistance at 1.2450 is a significant level and might not be easy to breach’. While our view was not wrong as GBP rose above 1.2400 (high of 1.2423), we did not anticipate the sharp drop from the high. GBP could continue to decline today but oversold conditions suggest it might not be able to maintain a foothold below 1.2260. Resistance is at 1.2330, a breach of 1.2355 would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Last Friday (31 Mar, spot at 1.2385), we held the view that GBP ‘is likely to head higher to 1.2450’. GBP rose to a high of 1.2423 and then dropped sharply from the high. In early Asian trade today, it took out our ‘strong support’ level of 1.2300. The breach of 1.2300 indicates that GBP is not strengthening further. While the immediate pressure is on the downside, we view any decline as part of a 1.2190/1.2380 range. In other words, we do not expect a clear break below 1.2190.”