The Pound Sterling is currently weak, down 0.6% against the US Dollar and not performing well compared to most G10 currencies. The strength of the USD is influencing this trend. Recent fiscal updates leading up to the budget due on November 26 have UK officials focused on strategies to regain market confidence. The performance of GBP is closely linked to the spread movements, and the Relative Strength Index indicates it is deeply oversold, below 30. With no significant support until 1.30, we expect the currency to trade between 1.3020 and 1.3120. **Disclaimer:** Market observations may have inaccuracies and do not provide personal investment advice. This information is strictly informational and is not a recommendation for investment. Any investment choices should be made independently, keeping all risks in mind. The British Pound is facing challenges, struggling against a robust US Dollar and lagging behind other major currencies. Today’s decline reflects a growing pessimism we’ve seen for weeks, driven by recent data, including last week’s disappointing retail sales figures for October, which fell by 0.5%. This has heightened fears about a slowing economy. Now, all eyes are on the government’s fiscal plans and the upcoming budget on November 26. There is significant concern about whether the Chancellor can meet her fiscal targets, especially after early forecasts from the Office for Budget Responsibility predicted a £15 billion shortfall. These worries evoke memories of market instability from late 2022, and traders are reacting by pulling back on the Pound. This anxiety is evident in the bond market. The yield on 10-year UK government bonds has recently risen above 4.5%, indicating that investors now require a higher return for holding UK debt, which signals lower confidence. Currently, the Pound is highly sensitive to changes in bond yields, creating risks as we approach the Bank of England meeting this Thursday. The Bank of England is expected to maintain interest rates, but the market senses a possible dovish shift. With October’s inflation data at 2.1%, just above the Bank’s target, there’s little pressure for aggressive action. In fact, derivative markets show a slight chance of an interest rate cut before the first quarter of 2026 ends. With high uncertainty around both the Bank of England and the budget, we anticipate increased volatility for the Pound. Traders might consider buying options strategies like straddles or strangles in GBP/USD, which could profit from significant price movements in either direction without needing to predict the outcome of upcoming events. This approach protects against potential policy surprises. For those with a directional view, the Pound seems likely to continue downward. Selling during any rallies appears to be a wise move, with derivative traders possibly looking to sell call options or set up bear call spreads close to the 1.3120 resistance level. This strategy would take advantage of the overall weak sentiment while managing risk. Technically, the Pound is showing signs of being deeply oversold, which might typically suggest a rebound. However, in a fundamentally weak environment, such indicators can be misleading, and any recovery is likely to be brief. A drop below the key 1.3000 level could lead to a rapid decline, so we are closely monitoring that support level.

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