24-hour view: Yesterday, when GBP was trading at 1.2165, we indicated that “as long as GBP stays below 1.2220, it could dip to 1.2135 before stabilisation is likely.” We added, “The next support at 1.2095 is highly unlikely to come under threat.” Our view for GBP to weaken was not wrong, even though the decline was stronger than expected as GBP dropped to a low of 1.2109. GBP continues to trade on a soft tone in early Asian trade today, and it is likely to weaken further. However, the major support at 1.2040 could be out of reach. Resistance is at 1.2135, followed by 1.2155.

Next 1-3 weeks: We indicated yesterday (25 Oct, spot at 1.2165) that GBP “is likely to consolidate between 1.2095 and 1.2285 for the time being.” We did not anticipate GBP to approach 1.2095 so soon. Downward momentum is beginning to improve. From here, as long as GBP stays below 1.2200, it is likely to test the early October low near 1.2040. A break of this major support could potentially trigger a further drop to 1.2000.