24-hour view: We highlighted last Friday that “the strong rebound in GBP could extend to 1.2250 before levelling off.” We also highlighted that “the next resistance at 1.2300 is unlikely to come under threat.” While GBP rebounded more than expected, it did not threaten the resistance at 1.2300 (it pulled back sharply and quickly from a high of 1.2271). The short-lived advance did not lead to any buildup in momentum and GBP is unlikely to advance further. Today, GBP is more likely to consolidate, probably in a range of 1.2145/1.2255. 

Next 1-3 weeks: There is no change in our view from last Friday (29 Sep, spot at 1.2200). As highlighted, the recent month-long GBP weakness has finally ended. The current price movement is likely the early stages of a consolidation phase. In view of the sharp drop over the past month, GBP could consolidate in a relatively broad range of 1.2100/1.2380 for the time being.