GBPUSD had a day of ups and downs, starting with a high of around 1.3302 during the Asian session and dropping to an early European low of 1.32587. This created a 44-pip range, which is below the one-month average of about 91 pips. Recently, the range has increased to 54 pips, suggesting more movement could happen. If the upward trend continues and buyers stay strong, the next target will be the previous day’s high at 1.33308, which is close to the declining 200-hour moving average at 1.3334. If this level is surpassed, attention may shift to the 100-day moving average at 1.33455.

Technical Analysis

Buyers gained confidence today as the session lows hovered around the declining 100-hour moving average. This successful test encouraged dip buyers to support the pair, despite some price swings throughout the day. Buyers have stepped in to protect the 100-hour moving average, a positive sign for the pound. Last Friday, the US jobs report was weaker than expected, with only 150,000 jobs added in July, which is putting pressure on the dollar. The current narrow trading range indicates the market is preparing for its next move. With this technical support, buying short-term call options with a strike price near 1.3350 seems like a good strategy for the upcoming weeks. The pair’s low daily volatility means that option premiums are currently lower than earlier this year. A breakout above the 200-hour moving average at 1.3334 could lead to a swift move in that direction.

Considerations Every Trader Should Make

However, we should also think about the risk of a reversal, especially with the Bank of England’s upcoming decision. UK inflation was 2.1% in July, just above the target, leading to uncertainty about future rate hikes. If the price breaks below the 1.3250 level, the recent buying interest might fade quickly. For traders who hold long positions, purchasing put options with a strike near 1.3250 could serve as cheap insurance against sudden drops. This approach is appealing now, as low volatility makes protective puts relatively affordable. It lets us stay optimistic while managing potential losses if the technical support doesn’t hold. Historically, the current environment is unusually calm. From 2022 to 2023, daily ranges often exceeded 150 pips due to global inflation and aggressive central bank actions. Today’s range of under 60 pips shows a cautious market awaiting a clear trigger from either the UK or US. Create your live VT Markets account and start trading now.

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