Pound Sterling is expected to rise in the near future, but analysts from UOB Group believe it might not go beyond 1.3505. Recently, GBP reached a high of 1.3491 and closed slightly higher at 1.3443. At present, GBP/USD is holding steady at 1.3436, helped by a weaker US dollar due to ongoing trade tensions. US President Donald Trump has threatened tariffs on several European nations unless Greenland is handed over to the US.

European Funds Reallocation

This situation has prompted a shift of funds from American assets to European currencies and gold. The Orange Juice Newsletter provides market insights and updates for informed trading. Gold prices have been solidly consolidating near all-time highs because of geopolitical risks. Currently, the sentiment for GBP/USD suggests range-trading without significant directional changes. It’s important to note that the information shared should not be considered as investment advice. Any investment decisions should be based on thorough personal research. Both FXStreet and the author state they are not responsible for any investment losses or inaccuracies in this article. The content is purely informative and not intended as investment guidance.

Volatility Opportunities

With GBP/USD expected to trade within a range, there’s an opportunity to sell volatility. Strategies like iron condors, focused around the 1.3450 level, could be successful in the coming weeks. This approach is based on the belief that the pound will likely stay below 1.3505 despite the weak dollar. The current sell-off of the dollar is fueled by renewed trade tensions over Greenland, a situation reminiscent of trade disputes in 2025. This geopolitical uncertainty has increased the currency market’s volatility index by 15% this month, reaching 22. This indicates that, while the range may hold, sudden market movements are a genuine risk. Additionally, UK inflation remains stubbornly high at 3.8% as of the end of 2025, limiting the Bank of England’s options. The Federal Reserve is also expected to keep rates unchanged this month, following two cuts late last year. The inactivity from both central banks supports the notion of a sideways market. However, any escalation in tariff threats could disrupt this range and cause spikes in volatility. Traders should consider using long straddles or strangles as either a hedge or a speculative move on potential breakouts. These strategies would benefit if the pound makes a sudden, significant move in either direction. This sentiment is also reflected in the positioning data from last week, showing that large speculators have decreased their net-long positions in the US dollar for the third week in a row. This suggests a growing belief that the dollar will likely trend sideways or down for the time being. Create your live VT Markets account and start trading now.

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