Pound Sterling (GBP) may trade in a range, probably between 1.2180 and 1.2290. In the longer run, weakness in GBP has stabilized; it is likely to trade in a range between 1.2130 and 1.2390, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Weakness in GBP stabilizes

24-HOUR VIEW: “Yesterday, we were of view that GBP ‘is likely to trade in a 1.2150/1.2275 range.’ Our view was incorrect, as GBP dipped to 1.2155, soared to 1.2307, and then pulled back sharply to close at 1.2245 (+0.23%). The price action provides no clarity. Today, GBP may trade in a range, probably between 1.2180 and 1.2290.”

1-3 WEEKS VIEW: “We shifted our GBP view to negative late last week (as annotated in the chart below). Tracking the decline, in our latest narrative from two days ago (14 Jan, spot at 1.2230), we highlighted that ‘deeply oversold conditions signal GBP could trade in a range for a couple of days.’ We also highlighted that ‘a breach of 1.2300 (‘strong resistance’ level) would mean that the weakness in has stabilized.’ Yesterday, GBP rose briefly above 1.2300, reaching a high of 1.2307. Although GBP subsequently pulled back from the high, downward momentum has largely eased. In other words, the weakness in GBP has stabilized. For the time being, we expect GBP to trade in a range, most likely between 1.2130 and 1.2390.”