24-hour view: We expected GBP to “continue to weaken yesterday.” However, we were of the view that “the major support at 1.2040 could be out of reach.” GBP weakened less than expected to 1.2070 before rebounding. The rebound in oversold conditions suggests GBP is unlikely to weaken further. Today, GBP is more likely to trade in a range, probably between 1.2100 and 1.2170. 

Next 1-3 weeks: Our update from yesterday (26 Oct, spot at 1.2105) is still valid. As highlighted, downward momentum is beginning to improve. As long as GBP stays below 1.2200 (no change in ‘strong resistance level), 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.