GBP/USD is on a downward trend after breaking key support levels. Société Générale’s FX analysts suggest that any future recovery will likely be limited. The currency pair has fallen below 1.3140 and is now approaching interim support levels between 1.2940 and 1.2920. The Daily MACD shows a strong negative trend, indicating ongoing bearish momentum for GBP/USD. The moving average near 1.3250 may serve as resistance, and without a breakthrough, the decline is likely to continue.

Immediate Path Analysis

With GBP/USD dropping below the crucial 1.3140 level, the outlook appears negative. The next possible stoppage for its drop could be around 1.2940/1.2920. The downward pressure is strong, and traders should prepare for further declines in the coming weeks. This technical trend matches the current economic situation. Last week’s UK retail sales data for October showed an unexpected 0.8% drop. Meanwhile, the latest U.S. non-farm payroll report revealed over 250,000 new jobs, boosting the dollar. The economic struggle in the UK compared to the strong U.S. economy further weakens the pound. For those trading derivatives, buying put options could be a smart move to take advantage of the continued decline toward the 1.2920 target. Additionally, selling call options with strike prices near the 1.3250 resistance level may be effective, as any price rises are likely to be short-lived. The 1.3250 level is crucial for the currency pair.

Historical Context and Future Outlook

We saw a similar situation in late 2024 when differences in policy between the Bank of England and the Federal Reserve led to a prolonged drop in the pound. This historical pattern suggests that the current trend may continue as long as economic data remains consistent. Traders should use any movement back toward 1.3250 as a chance to reevaluate bearish positions, rather than seeing it as a reversal signal. The daily MACD indicator is still strongly negative, showing that sellers are firmly in control and a significant recovery is not anticipated yet. The recent break of the 200-day moving average has historically led to higher volatility. Thus, using options to manage risk could be particularly beneficial in this environment. Create your live VT Markets account and start trading now.

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