Pound Sterling is expected to move between 1.3220 and 1.3320. Analysts Quek Ser Leang and Peter Chia note that the chances of GBP dropping below 1.3140 have decreased significantly. Recently, the GBP increased to 1.3309 before settling at 1.3278, which is a rise of 0.56%. It is anticipated that the GBP will stay within this range. Over the past week, the GBP came close to 1.3140, hitting a low of 1.3143 before bouncing back to 1.3309. This slowdown in downward movement has reduced the likelihood of falling below 1.3140. For the GBP to stabilize further, it must break through the resistance level at 1.3355. The earlier expectation of continued GBP weakness now seems less likely. Looking forward, we expect Pound Sterling to trade in a narrow range between 1.3220 and 1.3320 in the coming weeks. The bounce from the low of 1.3143 has eased downward pressure, indicating that the risk of a sharp decline has decreased for now. Recent economic data supports this stability. The inflation report for July 2025 revealed that UK CPI dropped to 2.8%, slightly below forecasts. This eases pressure on the Bank of England to raise interest rates aggressively. Additionally, the UK’s GDP for Q2 2025 showed modest growth of 0.2%, reinforcing a steady pound instead of a volatile one. For our derivative strategies, this indicates that we should focus on low volatility. We might consider selling out-of-the-money options to earn premiums. Selling call options with a strike price above the 1.3355 resistance level looks promising. At the same time, selling put options with a strike price below the stronger support level of 1.3140 could be a wise move. Our aim is for the GBP/USD pair to stay between these sold strike prices, allowing the options to lose value as they approach expiration. This lets us keep the premium as profit. Compared to the intense volatility during the aggressive rate hikes of 2023 and early 2024, this calm period offers a stark contrast. The market has shifted from strong trends to a phase of limited movement. The bounce from near 1.3140 last week signals the start of this new phase. A well-defined risk strategy would be to set up an iron condor. This involves selling a call spread above the range and a put spread below it concurrently. This strategy provides a clear maximum profit and loss, taking advantage of expected stability while controlling our risk exposure.

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