UOB economists Quek Ser Leang Lee and Sue Ann note that GBP/USD spiked to 1.3599 before dropping sharply and then sliding again on Monday. They see a chance of a test of 1.3450, with 1.3400 unlikely to be threatened. For the next one to three weeks, they expect the Pound to trade in a 1.3400–1.3600 range as earlier upside momentum has fizzled.

Pound-Dollar shifts into range trading

"GBP popped to a high of 1.3599 and then pulled back sharply to 1.3505. Although GBP closed largely unchanged at 1.3518 (-0.07%), it dropped sharply today."

"The increase in downward momentum is not enough to indicate a continued decline. However, there is a chance for GBP to test 1.3450. "

"A break below this level is not ruled out, but the major support at 1.3400 is unlikely to come under threat. On the upside, a breach of 1.3545 (minor resistance is at 1.3510) would mean that GBP is likely to range-trade instead of testing 1.3450."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)