The Pound Sterling (GBP) is likely to trade sideways between 1.3120 and 1.3210. In the longer run, increase in momentum is likely to lead to further GBP strength, potentially breaking this year’s high, near 1.3270, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP rangebound for now

24-HOUR VIEW: “After GBP soared two days ago, we indicated yesterday that ‘while the sharp advance seems to be overdone, there is room for GBP to rise 1.3240 before levelling off.’ GBP subsequently rose less than expected to 1.3229, staging a surprisingly sharp pullback to 1.3147. The pullback appears to be running ahead of itself, and GBP is unlikely to weaken much further. Today, GBP is more likely to trade sideways between 1.3120 and 1.3210.”

1-3 WEEKS VIEW: “Two days ago, GBP rose sharply. Yesterday (17 Sep, spot at 1.3210), we highlighted that ‘the increase in momentum is likely to lead to further GBP strength, potentially breaking above this year’s high, near 1.3270.’ We added, ‘should GBP break below 1.3120, it would mean that the buildup in momentum has faded.’ GBP then rose to 1.3229 before falling sharply to 1.3163. While upward momentum has slowed, we continue to hold the same view for now.”