The GBPUSD started the day on a weaker note, falling below its 100-day moving average at 1.34349. This dip echoed Friday’s drop below the same level, but sellers couldn’t keep up their momentum. Soon after, buyers stepped back into the market, leading to a price recovery. Looking at the hourly chart, the price has now moved above the 100-hour moving average, which was a resistance earlier in the day. The upward swing is nearing the 200-hour moving average at 1.34834. This level had limited gains yesterday and is seen as a resistance point by traders, with potential risk just above it.

Breach of the 200-Hour Moving Average

Breaking above the 200-hour moving average would be significant, given its recent role as resistance. This may shift the market from sellers to buyers, possibly generating more upward momentum. However, if this moving average holds and the price drops back below the 100-hour moving average, it could weaken the positive outlook and bring back downward risk. Both buyers and sellers have their eyes on this level. The immediate challenge for traders is the 200-hour moving average around 1.34834. It serves as a clear line in the sand; sellers are defending it, but the bounce from below the 100-day moving average indicates that buyers are still in the game. This ongoing struggle suggests that using short-term options strangles could be a smart way to capitalize on market indecision.

Conflicting Economic Data

This technical scenario is supported by the conflicting economic data from August 2025. The latest UK inflation report for July showed a rate of 3.1%, slightly below expectations but still too high for the Bank of England to ease its stance. On the other hand, the recent US Non-Farm Payrolls report highlighted job creation of only 195,000, falling short of forecasts and raising questions about the Federal Reserve’s tightening plans. Given this fundamental uncertainty, we think it’s wise to adopt a strategy that benefits from market ranges in the coming weeks. An iron condor options strategy, with short strikes above 1.3500 and below the recent support around 1.3400, looks appealing. This will allow us to profit if the currency pair stays between these important technical and psychological levels. We’ve seen this pattern before, especially during the turbulent times of 2023 when both central banks were on different policy paths. During those periods, breakout trades were often reversed, and volatility-selling strategies tended to succeed. We expect a similar situation now, where sharp price moves in either direction may lack the strength to sustain. Our cue to change this neutral stance would be a daily close above the 1.34834 level, indicating that buyers have taken control. Conversely, a rejection at this level followed by a drop below the 100-hour moving average would suggest sellers are regaining strength. Until then, we will treat this as a range-bound market and adapt our derivative portfolios accordingly. Create your live VT Markets account and start trading now.

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