Rapid rise has scope to extend, but any advance is unlikely to break clearly above 1.2475. In the longer run, for the time being, GBP is expected to trade in a range of 1.2245/1.2530, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP is expected to trade in a range of 1.2245/1.2530

24-HOUR VIEW: “Yesterday, when GBP was at 1.2310, we indicated that ‘while the sharp drop in GBP today has scope to extend, we expect the 1.2245 level to provide support.’ GBP subsequently dropped to 1.2249 and then reversed sharply, soaring to a high of 1.2455. This time around, the rapid rise has scope to extend, but any advance is unlikely to break clearly above 1.2475. The major resistance at 1.2530 is not expected to come under threat. On the downside, support levels are at 1.2380 and 1.2330.”

1-3 WEEKS VIEW: “We noted early yesterday (03 Feb, spot at 1.2310) that ‘despite dropping sharply upon opening today, there has been no significant increase in downward momentum.’ However, we were of the view that GBP ‘is likely to trade with a downward bias towards 1.2245.’ GBP subsequently dropped to within a few pips of 1.2245 (low of 1.2249) and then in a sudden move, surged above our ‘strong resistance’ level of 1.2435 (high of 1.2455). Downward momentum has fizzled out, and for the time being, we expect GBP to trade in a range of 1.2245/1.2530.”