In the view of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, GBP/USD is still seen navigating the 1.2030-1.2270 rang for the time being.

Key Quotes

24-hour view: We highlighted last Friday that GBP “could rise above 1.2230, but it is unlikely to be able to maintain a foothold above this level.” We also highlighted that “the major resistance at 1.2270 is unlikely to come under threat.” However, the price action did not develop as we anticipated. In NY trade, GBP plunged to a low of 1.2107 and then lifted off to surge to a high of 1.2262. From here, the outlook is unclear, and GBP could trade in a relatively broad range of 1.2130/1.2270 today. 

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. There is no change in our view. Looking ahead, if GBP breaks clearly above 1.2270, it could trigger a recovery to 1.2350.