Daily Chart Technical Picture
On the daily chart, GBP/USD remains mildly bearish and is trading below a flattening 100-day exponential moving average and under the Bollinger middle band. The RSI is near 45 and is below the midline, pointing to weaker upward momentum. The first support to watch is 1.3230, with a further downside level near 1.3160 if that breaks. The first resistance is around 1.3430, and a move above it would shift focus to 1.3560. The technical analysis section was produced with help from an AI tool. The current environment suggests a continued decline for GBP/USD, making put options an attractive strategy for the coming weeks. We are seeing sustained US dollar strength, driven by its safe-haven appeal amid the escalating conflict mentioned. Buying puts expiring in late April or May with a strike price near 1.3250 could position traders for a move toward the initial support at 1.3230.Options Strategy Considerations
The UK’s economic backdrop supports this bearish view, with recent data showing Q4 2025 GDP growth at a mere 0.1% and February’s inflation remaining sticky at 3.9%. This contrasts with the US, where a robust February jobs report of over 210,000 new jobs keeps the Federal Reserve’s policy outlook more hawkish than the Bank of England’s. This policy divergence is a key factor weighing on the pound. For those anticipating a more gradual slide rather than a sharp drop, a bear call spread is a viable alternative. By selling a call option with a strike price at the 1.3430 resistance level and simultaneously buying a further out-of-the-money call, we can collect a premium. This strategy profits if the pair stays below the short strike price through expiration, capitalizing on the expected range-bound action. We must remember how the pound reacted to the energy shock of 2022, when stagflation fears became reality and drove the currency toward historic lows. The current situation, with Brent crude again pushing past $100 per barrel, echoes that period and highlights the significant downside risk for the UK economy. This historical precedent gives weight to the potential for a break below the 1.3230 support. Create your live VT Markets account and start trading now.
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