Technical Trend Signals
Recent lower closes from the 1.36 area and an inability to regain the short-term average suggest rebounds may face further downside. The daily chart shows the pair moving lower within a descending channel pattern. The 14-day Relative Strength Index (RSI) is near 39, below the 50 midpoint. This indicates ongoing selling pressure, while not yet at oversold levels. We see the bearish bias on GBP/USD prevailing as the pair tests the 1.3300 support level. The failure to reclaim higher moving averages suggests that any upward movement will likely be met with selling pressure. This technical weakness is signaling that downside momentum is still in control. Given this outlook, traders could consider buying put options with strike prices below the current 1.3300 support, such as 1.3250 or 1.3200. These positions would profit from a continued decline in the pair’s value in the coming weeks. We are looking at expirations in late April or early May 2026 to capture this expected move.Options Strategy Considerations
This view is reinforced by fundamental factors, as recent UK inflation data for February 2026 fell to 1.7%, putting pressure on the Bank of England to consider rate cuts. In contrast, the latest US Non-Farm Payrolls data showed the addition of 210,000 jobs, beating expectations and suggesting the Federal Reserve will hold interest rates steady. This monetary policy divergence strongly favors the US dollar. This is a notable shift from the sentiment we observed through much of 2025, when persistent services inflation kept the Bank of England in a more hawkish position. That former bullish driver for the pound has now clearly faded. This makes current rallies seem more like corrective bounces within a downtrend than a genuine reversal. For those wanting to manage premium costs or who expect a slow grind lower, a bear call spread could be an effective strategy. This involves selling a call option at a lower strike price, perhaps around 1.3400, and buying another call at a higher strike, like 1.3500. This strategy profits if the pair stays below the lower strike price by the expiration date. Create your live VT Markets account and start trading now.
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