GBP/USD had a volatile session. It rose to 1.3712, then fell to 1.3610 during the New York session. It later closed near 1.3628.
In the near term, there is a risk of a brief dip below 1.3600. However, a deeper move down to 1.3550 is not expected.
Near Term Levels And Momentum
For the decline to continue, the pair would need to stay below 1.3675. Minor resistance sits at 1.3650.
Over the next 1–3 weeks, upward momentum appears to be fading. The pair is expected to trade in a range between 1.3550 and 1.3700.
This piece was produced with the help of an Artificial Intelligence tool and reviewed by an editor. It was published by the FXStreet Insights Team, which selects market observations from external sources and adds notes from internal and external analysts.
The recent GBP/USD volatility—spiking to 1.3712 and then dropping sharply—suggests the uptrend is losing strength. The initial jump likely followed the surprise rise in the UK’s January inflation data, which came in at 2.3% last week, slightly above expectations. We now expect a period of sideways trading.
Options Positioning For Range Trading
The sharp drop from the highs was driven by a stronger-than-expected U.S. jobs report. The report showed the economy added more than 250,000 jobs, supporting a stronger dollar. Even so, the move lower has not turned into sustained downside momentum. This points to a push-and-pull between the two currencies and supports our view that GBP is unlikely to trend strongly in either direction in the near term.
For derivatives traders, this shift favors strategies that benefit from limited price movement and lower volatility in the weeks ahead. If GBP/USD stays between 1.3550 and 1.3700, selling options—such as short straddles or strangles—may be attractive. These trades can benefit from time decay as long as the pair remains inside this expected range.
In the fourth quarter of 2025, GBP/USD moved gradually higher on hopes that the Bank of England would cut rates more slowly than the Federal Reserve. A sustained break below 1.3550 would challenge the range-trading view and suggest the dollar is becoming the dominant market theme again. Traders should also watch resistance near 1.3675. If the pair cannot break above it, the sideways bias remains in place.
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