24-hour view: We expected GBP to trade between 1.2455 and 1.2525 yesterday. However, GBP traded in a lower range of 1.2434/1.2511 before ending the day little changed at 1.2490 (-0.04%). The price action appears to be consolidative, and we continue to expect GBP to trade in a range, probably between 1.2440 and 1.2530. 

Next 1-3 weeks: Our most recent narrative was from two days ago (12 Sep, spot at 1.2505), wherein “downward momentum has slowed”, and “if GBP breaks above 1.2555, it would mean that GBP is not weakening further.” Yesterday, GBP fell to a fresh 10-week low of 1.2434 before rebounding quickly. Despite the decline, downward momentum has not improved further. That said, as long as 1.2555 (no change in ‘strong resistance’ level) is not breached, there is a chance for GBP to drop to 1.2400 before stabilisation can be expected. If GBP breaches 1.2555, it would mean that the weakness that started early last week has stabilised.