Implied volatility levels for GBP and EUR currency pairs are important to watch before the release of the EU and UK flash PMI data. Key levels for pairs like GBPUSD, EURUSD, and EURGBP give clues about potential market movements. For EURUSD, resistance is at 1.1700 and support is at 1.1600. In EURGBP, resistance is 0.8680 and support is 0.8630. EURJPY has resistance at 172.400 and support at 170.900. GBPUSD shows resistance at 1.3520 and support at 1.3400. The GBPCHF pair has resistance at 1.0850 and support at 1.0760, while GBPJPY lists resistance at 199.00 and support at 197.00.

Dynamic Indicators Of Support And Resistance

These levels come from 1-month implied volatility, which acts as dynamic indicators of support and resistance. When combined with technical analysis tools like pivot points and Fibonacci retracements, they help to pinpoint potential entry, profit-taking, or stop-loss levels. Implied volatility provides a data-driven price range that supports technical analysis. Implied volatility ranges are tightening as we approach today’s key flash PMI data from the UK and Eurozone. These reports serve as a crucial economic check for August and will shape expectations for the central bank meetings in September. For derivative traders, the 1-month volatility levels indicate expected limits for currency fluctuations in the coming weeks. The market is especially focused on the Eurozone’s manufacturing PMI. This has struggled to stay above the vital 50-point mark for most of the past year. Earlier, in early 2025, a weak PMI reading of 46.5 led EURUSD to break through its expected support level. With the ECB set to decide on rates on September 11th, a poor reading today might drive traders to buy put options below the 1.1600 support level in EURUSD. For the pound, the scenario differs slightly. The recent UK services PMI data has shown resilience, often exceeding forecasts. The one-month range for GBPUSD between 1.3400 and 1.3520 suggests uncertainty in the market’s direction. If the UK services number is strong while the EU manufacturing figure weakens, we could explore strategies that capitalize on EURGBP dropping below its 0.8630 support.

Investment Strategies Based On Volatility

Given the current uncertainty, placing trades that profit from a significant price change—regardless of its direction—could be wise. This is particularly true for pairs like GBPJPY, which has an expected range of 200 pips between 197.00 and 199.00. A surprise in the PMI data could lead these currency pairs to break out of their implied volatility bands, benefiting traders prepared for such movements. These volatility-based levels are most useful for determining option strike prices for the month ahead. For example, if we anticipate weakness in the pound following the Bank of England’s meeting on September 18th, the 1.3400 level in GBPUSD could be a critical strike price for put options. Merging these objective data points with our technical insights allows us to create a stronger trading strategy. Create your live VT Markets account and start trading now.

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