Us Data And Market Focus
In US data, S&P Global said the February Manufacturing PMI rose to 51.6 from 51.2 and beat estimates. Markets are watching the ISM Manufacturing PMI, seen easing to 51.8 from 52.6. In UK politics, local elections in northern England weakened Prime Minister Keir Starmer’s position within the Labour Party. Bank of England rate-cut odds for the 19 March meeting fell to 48% from 84%, according to Prime Market Terminal. Technically, GBP/USD was at 1.3409, with resistance near 1.3500 and support at 1.3350. Further supports are 1.3250 and 1.3150, while upside levels include 1.3680 and 1.3835. Reflecting on the events of early 2025, we saw how the conflict in the Middle East immediately triggered a flight to safety, strengthening the US Dollar and pushing GBP/USD down towards 1.3400. That period demonstrated how geopolitical shocks can override domestic monetary policy expectations, as odds for a Bank of England rate cut were dramatically repriced. This established a clear playbook where heightened global risk translates directly into pressure on Sterling against the Greenback. As of early March 2026, the aftershocks of that conflict continue to influence the market, with Brent crude oil prices remaining stubbornly above $95 per barrel, weighing on the UK’s economic outlook. While UK inflation has cooled from its 2025 peaks, recent data from the Office for National Statistics shows it persists at 3.2%, keeping the Bank of England from committing to a clear easing cycle. This contrasts with the US, where the economy has shown more resilience, allowing the Federal Reserve more flexibility.Volatility Strategy Considerations
Given this backdrop, we should anticipate that implied volatility for GBP/USD will remain elevated compared to the calmer periods before 2025. Traders should consider strategies that profit from price swings, such as long straddles or strangles, particularly ahead of key data releases or renewed geopolitical headlines. The memory of last year’s sudden 0.50% daily drops underscores the risk of being caught in a purely directional, unhedged position. For those with a bearish outlook on Sterling, buying GBP/USD put options offers a defined-risk way to position for further downside. We recall that the pair found temporary support around 1.3350 in 2025, so we should view strike prices below that level as potential targets in the coming weeks. This approach allows us to capitalize on any repeat of risk-off sentiment without exposing ourselves to unlimited losses. To mitigate costs and reflect the technical view from 2025 of a “mildly bearish” trend, we can use bear put spreads instead of buying puts outright. By selling a lower-strike put against a purchased put, we can finance the position and define a clear profit range. This is a prudent strategy if we believe a decline is likely but will be corrective rather than a complete collapse. However, we must also remember the longer-term rising support line noted in the 2025 analysis, which was then rooted at 1.3035 and now sits closer to 1.3200. Should the pair test this significant trendline, we should be prepared to shift strategies, possibly by selling cash-secured puts or initiating bullish positions. This level has historically provided a floor for Sterling, suggesting any deep declines may present a buying opportunity within the broader structure. Create your live VT Markets account and start trading now.
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