United Overseas Bank (UOB) strategist Quek Ser Leang notes GBP/USD recovered to 1.3238 after failing to extend Thursday’s decline, but intraday gains are expected to stay within 1.3215–1.3265. Over the next 1–3 weeks, he maintains a mildly negative stance, looking for a move toward 1.3140 while 1.3265 acts as strong resistance.

Pound-Dollar rebound seen limited below resistance

“24-HOUR VIEW: Following last Thursday’s price action, we stated on Friday that “downward momentum is increasing, albeit not by much.” We expected GBP to “edge lower,” but we pointed out that “any decline is unlikely to reach the major support at 1.3140.” Our view was incorrect, as after dipping to a low of 1.3184, GBP rebounded to a high of 1.3256. While there is scope for the rebound to extend, given that there has been no clear increase in upward momentum, any advance is likely to remain within a 1.3215/1.3265 range. In other words, GBP is unlikely to break clearly above 1.3265.”

“1-3 WEEKS VIEW: We turned slightly negative on GBP last Friday (02 Oct, spot at 1.3195). We indicated that “while downward momentum is building again, it is not strong for now.” We held the view that GBP “is likely to edge lower toward the major support at 1.3140.” While the buildup has eased somewhat with the subsequent rebound in GBP, we will continue to hold the same view as long as the ‘strong resistance’ at 1.3265 (no change in level) is not breached.”