24-hour view: We highlighted last Friday that “further GBP weakness is not ruled out.” We added, “The major support at 1.2720 is likely out of reach.” GBP weakened less than expected, as it rebounded strongly from 1.2767 (high was 1.2888 in NY trade). Despite the strong rebound, there is no clear increase in momentum, and GBP is unlikely to rise much further. Today, GBP is more likely to trade sideways between 1.2810 and 1.2910. 

Next 1-3 weeks: There is not much to add to our update from last Friday (28 Jul, spot at 1.2800). As highlighted, “downward momentum is building again, it remains to be seen if GBP can break the major support at 1.2720.” All in all, we expect GBP to trade with a downward bias as long as it stays below 1.2930 (no change in ‘strong resistance’ level from last Friday).