The Impact of the Pound Sterling

On Thursday, the GBP/USD pair gained momentum, climbing back above 1.3400 as the US Dollar weakened. However, technical indicators suggest that new sellers may emerge at higher levels. For a strong bullish trend, the pair needs to break above the 1.3465-1.3475 range. Lately, GBP/USD has struggled to remain above the 100-period Simple Moving Average, indicating it may face bearish pressure. Negative oscillators show that any upward movements could be temporary unless the pair can consistently rise above key resistance levels. If buying continues beyond 1.3500, the pair could break through the 1.3525-1.3530 supply zone, aiming for the 1.3575-1.3580 area. On the downside, the 1.3370 level may act as support. If it falls below this, it could drop to the 1.3330-1.3325 zone, increasing bearish pressure. The Pound Sterling is the UK’s official currency and ranks fourth in global trading. Its value is influenced by the Bank of England’s monetary policy. The BoE manages inflation through interest rates, affecting the attractiveness of the GBP. Economic factors like GDP and trade balance also play a role, with strong data boosting the currency and weak data potentially lowering its value.

Trading Strategies for GBP/USD

We are seeing some positive movement in GBP/USD, with the pair rising back above 1.3400. This recent increase seems to be driven by a weaker US dollar, especially after the September 2025 non-farm payrolls report showed only 150,000 job gains, which fell short of expectations. Many believe that the Federal Reserve may be done with its rate hikes. Despite this bounce, the outlook is still cautious. The pair remains within a downward channel since early September 2025, and any upward movement might face significant selling pressure near the 1.3465-1.3475 resistance area. Recent UK economic data indicates this caution, as the September Services PMI fell to 49.5, suggesting a slight economic contraction. For traders expecting the rally to fail, buying put options could be a smart choice. A move below the channel support at 1.3370 would be the first signal to consider, possibly leading to a drop toward 1.3300. Traders might look at puts with strike prices around 1.3300 or 1.3250, set to expire in late October or November 2025, to take advantage of this potential decline. Conversely, if the pair breaks above the 1.3475 resistance level, it could indicate a trend change. In this case, traders might consider buying call options to target a move toward the 1.3525 supply zone. A bull call spread could also be beneficial here, allowing traders to reduce upfront costs while anticipating a moderate rise in the currency pair. Ultimately, the next significant moves will likely depend on expectations regarding central bank policies. After aggressive rate hikes globally throughout 2023 and 2024, markets have become sensitive to any signs of change. With UK inflation easing slightly to 3.1%, the Bank of England may be cautious about implementing another rate hike, which could limit the pound’s strength in the medium term. Create your live VT Markets account and start trading now.

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