24-hour view: Last Friday, we expected GBP to trade in a range of 1.2835/1.2930. However, GBP traded in a lower range of 1.2817/1.2904 before closing slightly lower at 1.2852 (-0.12%). Despite the lower trading range, there is no clear increase in downward momentum. We continue to expect GBP to trade in a range, probably between 1.2815 and 1.2895. 

Next 1-3 weeks: Last Thursday (20 Jul, spot at 1.2935), we highlighted that the decline in GBP had room to extend. However, we indicated that GBP “has to break clearly below 1.2850 before a sustained decline is likely.” After GBP broke below the strong support at 1.2850, we highlighted last Friday (21 Jul, spot at 1.2875) that GBP could drop further. We indicated that there is another solid support at 1.2780. We continue to hold the same view. Overall, only a breach of 1.2960 (‘strong resistance’ level was at 1.3000 last Friday) would indicate that GBP is not weakening further.