24-hour view: We expected GBP to trade in a range of 1.2655/1.2720 yesterday. However, after rising to a high of 1.2710, GBP dropped to a low of 1.2604. Despite the decline, there is no clear increase in downward momentum. Today, we continue to expect GBP to trade in a range, likely between 1.2600 and 1.2690. 

Next 1-3 weeks: Yesterday (30 Nov, spot at 1.2695), we noted that despite GBP rising to a high of 1.2733 on Wednesday, “upward momentum has not increased much.” However, we were of the view that “there is room for it to advance to 1.2745 before the risk of a pullback increases.” We did not anticipate GBP to drop to a low of 1.2604. The low was just a few pips above our ‘strong support’ level of 1.2600. Upward momentum is beginning to wane. In order to revive the flagging momentum, GBP must break and stay above 1.2690 in the next couple of days. Otherwise, a breach of 1.2600 will not be surprising and would mean that GBP is likely to pullback in the coming days.