The Pound Sterling (GBP) is maintaining stability in a calm market, shaped by wider currency trends. Scotiabank’s Chief FX Strategists, Shaun Osborne and Eric Theoret, have noted that technical indicators show the potential for the GBP to rise, with support near 1.3320. The EUR/GBP is benefiting from increasing yields in the Eurozone, which are narrowing the yield gap with UK Gilts. Since there are no new UK data reports, market sentiment is influenced by major currency trends, suggesting that EUR/GBP could remain strong, even during any downturns. Recently, the pound has climbed past the 1.3284 retracement resistance. Technical indicators suggest a positive outlook, with potential intraday gains expected around the 50% retracement level. If it rises above the 1.3355/65 range, a bullish trend is likely, with support at 1.3320. This analysis comes from the FXStreet Insights Team, who gather market observations and insights from experts, using both external specialists and internal analyses. Currently, the pound is stable, but technical signals indicate it may gain momentum and move higher. The key support level to watch is 1.3320. A break above 1.3365 could lead to more significant gains. This follows a solid increase earlier in the week, moving past the important 1.3284 retracement level from the decline seen in September and November 2025. The positive technical outlook for the pound is backed by fundamentals. The UK’s November 2025 inflation report showed an increase of 3.1%, surprising many who expected only 2.9%. This ongoing inflation will pressure the Bank of England to keep its policies strict well into the new year. Traders might consider strategies that could profit from a potential GBP/USD price rise, such as buying call options with strike prices above 1.3400. However, attention should also be paid to the Euro, as rising yields in the Eurozone are supporting the EUR/GBP cross in any dips. The German 10-year bund yield has recently risen to 2.65%, narrowing the gap with UK gilts. This means any increase in GBP/USD may be less significant than in EUR/USD, making pairs trading an appealing option. On the other side of the equation, the US dollar has weakened following recent comments from the Federal Reserve indicating a possible policy pause in early 2026. This stable “coiling” pattern in the pound suggests that implied volatility is currently low. We may consider buying straddles or strangles to prepare for a significant price move in either direction, especially as liquidity may decrease toward the end of the year.

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