Pound Sterling (GBP) may test the 1.3435 level, with strong support at 1.3400. There is some risk of a decline, but any fall in GBP is likely to stay between 1.3400 and 1.3535. In the last 24 hours, GBP was expected to trade between 1.3470 and 1.3535, but it fell to 1.3456. Despite this drop, the support at 1.3400 is expected to hold as long as GBP stays below 1.3500.

Short to Medium Term Outlook

Looking ahead 1-3 weeks, GBP was predicted to potentially rise to 1.3590, but chances of going higher are slim. GBP touched 1.3567 before pulling back. It needs to stay above the strong support level of 1.3455. It has now dropped to 1.3456, but the support level hasn’t been clearly broken. Any weakness in GBP should remain within the 1.3400/1.3535 range. A drop below 1.3400 could lead to a more significant decline. With GBP/USD’s upward momentum fading, we will focus on range-trading strategies with a bearish outlook. The pair is expected to stay between 1.3400 and 1.3535 in the near term. This means traders could sell call options or create bear call spreads with strike prices above 1.3535 to take advantage of the weak upward potential. This perspective is supported by recent UK economic data showing a slowing economy. December 2025 figures indicated UK inflation dropped to 2.8%, reducing pressure on the Bank of England, while Q4 2025 GDP growth was only 0.1%. These factors make it unlikely for the pound to rally significantly, reinforcing the resistance level at the top of the range.

Influence of Economic Data

On the opposite side, a strong US jobs market, which added 210,000 jobs in December 2025, continues to lend support to the dollar. This strength in the dollar reinforces the potential to test the 1.3435 level. Traders might consider buying put options with a strike around 1.3450 as a low-risk way to benefit from a move toward the lower end of the expected range. We need to stay alert for a possible drop below the major support at 1.3400, as this could trigger a larger decline. Remember how quickly the pair responded to unexpected policy news in late 2025, demonstrating that key levels can be breached fast. Setting alerts and planning to buy further out-of-the-money puts if 1.3400 breaks would be a smart way to protect against a sharp decline. Create your live VT Markets account and start trading now.

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