24-hour view: We expected GBP to trade with a downward bias yesterday. However, we held the view that “a sustained decline below 1.2690 is unlikely”. We also held the view that “1.2640 is unlikely to come under threat.” We did not anticipate the volatile price actions as GBP plunged to a low of 1.2615 and then snapped back up to close little changed at 1.2740 (+0.06%). The outlook for GBP is mixed after the sharp swings. Today, GBP could trade sideways in a range of 1.2665/1.2765. 

Next 1-3 weeks: Our most recent narrative was from Monday (21 Aug, spot at 1.2740), wherein the price actions in GBP over the past weeks appear to be part of a consolidation phase. We expected GBP to trade sideways between 1.2640 and 1.2830. Yesterday (23 Aug), GBP fell sharply and broke below 1.2640. However, the decline was short-lived, as GBP rebounded strongly from 1.2615. There is no increase in momentum, and we continue to expect GBP to trade sideways, albeit in a lower range of 1.2580/1.2780.