Early 2025 Lessons
We recall the situation back in early 2025, when a brief rally was sparked by geopolitical headlines. That temporary relief serves as a reminder that fundamental trends often overpower short-term news. The hope for a new bullish phase then did not materialize, with the pair eventually succumbing to broader dollar strength throughout that year. As of today, March 10, 2026, the pound is struggling below 1.2550, with a different set of pressures at play. While recent UK inflation data came in hotter than expected at 3.8%, the latest US Non-Farm Payrolls report showed a robust addition of 275,000 jobs. This puts the Bank of England in a difficult position while giving the Federal Reserve little reason to soften its own stance. The options market reflects this uncertainty, with 3-month risk reversals for GBP/USD showing a persistent skew towards puts at -0.8, indicating traders are paying a premium for downside protection. Implied volatility is also creeping up, now hovering near 9.5, suggesting an expectation of larger price swings. Given this environment, traders should consider buying puts to hedge long positions or initiate speculative downside exposure. For those looking for more defined risk, a bear put spread could be an effective strategy. This allows for capitalizing on a potential move lower while capping the maximum loss if the pound unexpectedly rallies. The key is to protect against the choppy, headline-driven price action that we have seen dominate recently.Key Levels To Watch
We are watching the 1.2600 level as a key resistance zone that has capped rallies multiple times this year. A failure to break above it in the coming weeks would reinforce the bearish case. To the downside, the year-to-date low near 1.2480 remains the critical support level to watch. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
