24-hour view: We highlighted yesterday that the “outlook for GBP is unclear,” and we expected it to trade in a relatively broad range of 1.2130/1.2270. However, GBP traded in a narrower range than expected (1.2166/1.2245). Upward momentum is building, albeit tentatively. Today, there is a chance for GBP to break above 1.2270 and head to 1.2305. The major resistance at 1.2350 is unlikely to come into view. Support is at 1.2220, followed by 1.2195. 

Next 1-3 weeks: In our latest narrative from last Thursday (05 Oct, spot at 1.2140), we highlighted that the recent downward momentum buildup has faded and the current price movement is likely part of a range-trading phase. We expected GBP to trade between 1.2030 and 1.2270. While GBP is still trading within the range, improving upward momentum suggests that GBP is likely to break above 1.2270. A breach of this level could trigger a stronger recovery to 1.2350. The likelihood of GBP breaking above 1.2270 and rising to 1.2350 will remain intact as long as GBP stays above 1.2150 in the next few days.