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    GBP trades lower at around 1.3490 against USD during European trading

    by VT Markets
    /
    Jan 7, 2026

    GBP/USD Pair Stabilizes in Range

    The GBP/USD pair has made a slight recovery after some gains in the last session, trading around 1.3510 during the Asian hours on Wednesday. The pair is inching higher as the USD shows some weakness ahead of the US ISM Services PMI and JOLTS job openings data due later today. Looking back to early 2025, the GBP/USD pair got stuck in a narrow range between 1.3470 and 1.3535 ahead of important US jobs data. We’re seeing a similar situation today, with the pair consolidating around 1.2750. Traders are watching for major US economic releases, especially the upcoming Non-Farm Payrolls report for December. Given the expectation for range-bound trading in the near future, strategies that benefit from low volatility could be useful. Selling option strangles with strike prices set outside the expected 1.2680 to 1.2820 range could be a smart way to collect premium. This strategy aims to profit from time decay if the currency pair does not make a significant move.

    Market Sentiment and Trading Strategies

    Current cautious market sentiment is backed by recent data. The US economy remains strong, while inflation continues to be a problem in the UK. For example, the US added 195,000 jobs in November 2025, but the UK’s latest inflation rate stayed high at 3.4%, well above the Bank of England’s target. This situation keeps both central banks cautious, limiting strong movements in the currency. While most expect consolidation, we should be ready for a potential upward move, like the 1.3590 level we watched last year. If the pair breaks above the current resistance at 1.2820, it could quickly move toward 1.2900. Buying short-term call options could be a low-risk way to take advantage of this potential move. It’s worth noting that the one-month implied volatility for GBP/USD has recently dropped to 6.5%, close to the lowest levels seen in 2025. This low volatility makes selling options more attractive than buying. Historically, periods of low volatility are often followed by sharp price movements, so managing risk is vital. Create your live VT Markets account and start trading now.

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