United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that GBP/USD remains in a short-term range after last week’s sharp drop, with intraday trade expected between 1.3535 and 1.3570. Despite deeply oversold conditions limiting sustained declines, they still see downside risk toward 1.3480 over the next 1–3 weeks, as long as the British Pound (GBP) stays below 1.3600. Longer-term, the pair is seen range-trading.

Pound holds range but bias still lower

“24-HOUR VIEW: After GBP fell sharply to a low of 1.3527 last Friday, we indicated yesterday that “conditions remain deeply oversold, and further sustained decline appears unlikely.” We also highlighted that GBP “may edge lower, but any decline should remain within a range of 1.3520/1.3570.” GBP subsequently traded between 1.3531 and 1.3565, closing little changed at 1.3549 (+0.06%). The price movements appear to be part of a range-trading phase. That said, the firmer underlying tone suggests GBP could trade in a higher range of 1.3535/1.3570 today.”

“1-3 WEEKS VIEW: While we highlighted last Friday (28 Aug, spot at 1.3595) that GBP “could edge lower,” we were of the view that “any decline could be contained within a 1.3550/1.3645 range.” After GBP dropped to a low of 1.3527, we highlighted yesterday (31 Aug, spot at 1.3540) that “the risk remains on the downside, and the level to watch is 1.3480.” We will continue to hold the same view as long as GBP holds below 1.3600 (no change in ‘strong resistance’ level).”