The Pound Sterling (GBP) is expected to rise to 1.3300, as predicted by analysts at UOB Group. On Wednesday, GBP hit 1.3245 and may continue to climb, aiming to reach resistance at 1.3300, with support levels at 1.3215 and 1.3180. The GBP/USD pair has gained ground, currently around 1.3239 after five days of gains. However, concerns about the UK’s economic health and new budget measures need attention.

Sterling Faces Challenges

The sterling faces several hurdles. Problems like low productivity, weak growth prospects, and ongoing inflation are impacting its long-term outlook. FXStreet provides updates and commentary on market trends. In related news, gold prices remain strong above $4,200, and silver has increased over $56. Both crude oil and gold prices are reacting to global economic factors. FXStreet emphasizes that these insights are not investment advice. Investors should do their own research and bear in mind that FXStreet isn’t responsible for any potential losses or inaccuracies. This article is for informational purposes only. Due to the pound’s recent rise, we are seeing a consolidation period between 1.3220 and 1.3270. Although there is a chance to reach the major resistance at 1.3300, the momentum from the last five days is slowing down. Traders should be cautious as the rally may be losing strength.

Economic Data and Market Strategy

The recent rise was driven by UK CPI data from October, which slightly missed expectations at 4.1%, providing temporary relief. Nevertheless, the underlying weaknesses in the UK economy remain concerning. Recent data indicated a minimal Q3 GDP growth of just 0.1%, and the Office for Budget Responsibility has lowered its 2026 growth forecast to 0.8%. In this context, strategies that capitalize on a limited move toward the 1.3300 resistance could be considered. A bull call spread could take advantage of this potential upward movement while minimizing risk against sudden downturns. This approach makes use of upward momentum without relying on a sustained breakout. Given the persistent doubts about the economy, acquiring longer-dated puts as a hedge is also a consideration. We recall the sharp decline in sterling at the end of 2024 after a similar rally also faltered. Preparing for a downturn below key support levels is a wise secondary strategy. The overall market environment, with gold steady above $4,200, indicates a strong demand for safe havens. Market expectations now suggest a nearly 75% chance of a US Federal Reserve rate cut in the first quarter of 2026, which is putting pressure on the dollar and supporting the pound’s gains. This economic uncertainty is likely to keep implied volatility high for GBP currency pairs. Therefore, strategies that involve selling options to earn premiums, like the mentioned call spread, look promising. This lets traders benefit from possible price movements and the heightened volatility environment. Create your live VT Markets account and start trading now.

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