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Cable’s stance remains negative for the time being and risks a dip to the 1.2700 neighbourhood, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP traded sideways as expected, albeit at a lower and narrower range than anticipated. While the consolidation phase appears incomplete, the underlying tone has weakened somewhat and this could lead to GBP drifting lower from here. That said, any weakness is viewed as part of a 1.2770/1.2830 consolidation range and not the start of a sustained decline”.

Next 1-3 weeks: “As indicated, the recent price action suggests GBP is likely searching and is possibly close to finding a short-term bottom. However, only a break of the 1.2890 ‘key resistance’ (no change in level) would indicate that the ‘negative’ phase that started more than a week ago (see update on 19 Oct, spot at 1.3020) has ended. Until then, GBP could dip towards the 1.2750 support but we apportion low odds for a sustained move below this level (next support is at 1.2700 followed by the year’s low at 1.2662)”.