The British Pound has increased by 0.6% against the US Dollar, continuing its upward movement and approaching the multi-year high it reached in June. Although the CBI business sentiment data came in weaker than expected, the main focus remains on central bank policies, which greatly influence currency performance.
This week has a light data schedule, shifting attention to central bank expectations, particularly with several Bank of England events planned. Recent sessions have allowed the GBP/USD pairing to recover and target its June highs.
Technical Analysis Key Support Levels
The 50-day moving average at 1.3412 acts as a medium-term support level. Short-term support is expected in the 1.1520-1.1550 zone, with little resistance until reaching 1.3750.
Sterling continues to rise, gaining 0.6% against the Dollar and demonstrating notable resilience. It is now nearing levels not seen since early summer, specifically its peak in June. This rise occurred despite disappointing sentiment data from the Confederation of British Industry. Usually, such data would negatively impact the currency, but currently, attention is on interest rate forecasts.
This week features a quieter economic calendar, directing focus back to the Bank of England. There are planned official remarks, which will shape expectations around monetary tightening, providing support to Sterling. It’s not only about what’s being said but how it aligns with the market’s existing forecasts.
Market Sentiment and Volatility
Recent price movements show the GBP/USD pair gradually regaining lost ground from earlier uncertainties. It is currently testing previous highs, and with few short-term obstacles, it has the potential to reach higher resistance.
Technically, the chart shows support where it’s needed. The 50-day moving average around 1.3412 is being watched closely as a gauge for medium-term direction. Shorter-term support seems to be between 1.1520 and 1.1550, which has been effective in recent pullbacks. If momentum continues, there is little substantial resistance until approaching the 1.3750 level, where significant price rejection points from earlier in the year can be found.
These levels are important strategic markers. They help in assessing risk, especially when timing is crucial. Be cautious of any rapid moves towards the upper barrier, as they should correspond with the larger economic picture. Traders often prefer these periods of steady trends and low volatility to adjust their positions, particularly when there are no major political events or economic shocks.
Recent comments from Bailey have introduced various interpretations. Some view his remarks as cautiously optimistic, while others emphasize the need for continued awareness based on wage growth and service sector inflation. The subtleties in his comments are significant. They will influence forward pricing of Bank Rate expectations. If his tone aligns with comments from other MPC members speaking later this week, it could solidify market confidence.
Now the emphasis is on monitoring the tone, not just the content. In this environment, wide price fluctuations are less likely, but accumulation could occur beneath the surface. We are more focused on the forward curve movements rather than immediate headline responses. For now, the risk appears to increase.
As events unfold, keep a close watch on volatility readings. They remain low across GBP options markets, especially for the one-month tenor, suggesting that existing positions are not in a hurry to change. Meanwhile, open interest levels around the 1.36–1.38 strikes have risen in recent sessions, possibly indicating preparation for a breakout if interest rate differences widen unexpectedly.
In this calm data environment, technical indicators usually guide trading decisions. As the range narrows and support remains firm, traders have become more active at the higher delta end of the option chain. This isn’t unusual, but the scale of this activity shows growing confidence in the current direction, at least for the short term.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now