24-hour view: We expected GBP to trade in a range between 1.2815 and 1.2895 yesterday. However, after rising to a high of 1.2882 in London trade, GBP fell sharply to 1.2799. Downward momentum has increased, albeit not much. Today, GBP could dip below the solid support at 1.2780, but it might not be able to maintain a foothold below this level. The next major support at 1.2705 is highly unlikely to come into view. The downward pressure is intact as long as GBP stays 1.2865 (minor resistance is at 1.2845). 

Next 1-3 weeks: Last Friday (21 Jul, spot at 1.2875), we held the view that GBP could drop further. However, we noted there is a solid support at 1.2780. Yesterday, GBP dropped to a low of 1.2799. Downward momentum has increased slightly. In order for GBP to decline further, it must break and stay below 1.2780. The chance of GBP breaking clearly below 1.2780 will remain intact as long as the ‘strong resistance’ level at 1.2900 (which was at 1.2960 yesterday) is not breached. Looking ahead, if GBP breaks clearly below 1.2780, the focus will shift to 1.2705.