Sharp rebound has scope to test 1.3495 before a pullback can be expected; 1.3520 is not expected to come under threat. In the longer run, GBP is likely in a range-trading phase between 1.3390 and 1.3520, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Sharp rebound has scope to test 1.3495

24-HOUR VIEW: "GBP fell to a low of 1.3393 last Friday. When GBP was at 1.3405 in the early Asian session yesterday, we stated that 'even without a significant increase in downward momentum, GBP may yet test the major support at 1.3370'. We added, 'a clear break below this level appears unlikely'. Our assessments were incorrect, as GBP rebounded sharply to a high of 1.3486. The advance has scope to test 1.3495 before a pullback can be expected. The major resistance at 1.3520 is not expected to come under threat. On the downside, support levels are at 1.3445 and 1.3420."

1-3 WEEKS VIEW: "We revised our GBP view to negative yesterday (12 Jan, spot at 1.3405). We were of the view that GBP 'could decline to 1.3370, potentially reaching 1.3340'. Our view was invalidated quickly as GBP rose and broke above our ‘strong resistance’ level at 1.3475 (high of 1.3486). The price action suggests that GBP is likely in a range-trading phase, probably between 1.3390 and 1.3520."