24-hour view: We expected GBP to trade sideways between 1.2570 and 1.2650 yesterday. In NY trade, GBP dipped to 1.2563 and then rose quickly to 1.2673. Despite the relatively rapid rise, upward momentum has not improved much. That said, as long as GBP does not break below 1.2580 (minor support is at 1.2605), it could rise further. However, there does not appear to be enough momentum for GBP to break the major resistance at 1.2685.  

Next 1-3 weeks: Our most recent narrative was from last Friday (25 Aug, spot at 1.2600), wherein GBP is likely to weaken to 1.2530, possibly 1.2480. GBP then dropped to 1.2548 and rebounded. Yesterday, GBP rebounded further to 1.2655. Downward momentum is beginning to wane, and the likelihood of GBP weakening to 1.2530 has decreased considerably. That said, only a breach of 1.2685 (no change in ‘strong resistance level) would indicate that GBP is likely to trade in a range instead of declining further.