Pound Sterling is falling close to 1.3200 against the US Dollar during the European trading session on Thursday. This is the sixth day in a row of losses, driven by the US Dollar Index, which reached a two-month high of about 100.00 on Wednesday. However, the GBP/USD pair is gaining some ground in the Asian session on Thursday. It has partially recovered from the low of the previous day and is trading just above the mid-1.3200s. Still, caution is necessary regarding its chances for a significant recovery.

Pound Sterling Outlook

The Pound Sterling might weaken further, likely moving within a lower range of 1.3210 to 1.3310. The important level to watch next is May’s low of 1.3140, as strong downward pressure continues. All provided information is for reference only. Readers should do thorough research before making any investment choices since there are risks involved, including potential total loss of principal. This article does not provide personalized recommendations and should not be considered investment advice. The Pound Sterling is testing the 1.3200 level against the US Dollar after six straight days of decline. This pressure stems from the US Dollar Index reaching a two-month high above 100.00. The dollar’s strength is driven by recent data indicating a more resilient US economy, especially the strong jobs report for June 2025, which showed over 250,000 new jobs were added. In addition, the latest data from the Office for National Statistics revealed that UK GDP grew only 0.1% in the second quarter of 2025. The Bank of England kept interest rates unchanged at its last meeting but expressed a more cautious stance, increasing market expectations for a rate cut by the end of the year. This difference in policy with the still-hawkish US Federal Reserve is significantly affecting the currency.

Trading Strategies

Due to the strong downward momentum, we recommend that traders consider bearish strategies in the coming weeks. Buying put options on GBP/USD could be an effective way to take advantage of further declines while managing risk. These options will increase in value if the pair drops below the strike price before they expire. The immediate focus is on the May 2025 low of 1.3140, which serves as a crucial support level. A decisive fall below this level could lead to testing the 1.3000 psychological barrier, a mark not seen since the volatility of late 2024. Historically, the pair has dropped quickly during the rate-hiking cycles of 2023, suggesting that these levels can be reached swiftly once momentum builds. Traders should also prepare for increased currency volatility, especially with upcoming inflation reports from both the UK and the US in August. For those uncertain about the direction but anticipating significant movement, considering a strangle strategy may be beneficial. This involves buying both an out-of-the-money put and an out-of-the-money call to benefit from a substantial price swing in either direction. Create your live VT Markets account and start trading now.

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