Current Range Expectations for GBP

The Pound Sterling (GBP) is expected to trade between 1.3470 and 1.3535 in the short term. Over a longer period, it may rise to 1.3590, but it’s unlikely to go much higher. Recently, GBP fell sharply to 1.3415 before bouncing back. It tried to reach 1.3567 but fell back to 1.3492. The upward movement has slowed down, indicating that GBP will probably stay within the range of 1.3470 to 1.3535. In the next one to three weeks, GBP may rise to 1.3590, but the chances of it going beyond this level are low. It is expected to hold its ground as long as it stays above the support level of 1.3455. This analysis comes from the FXStreet Insights Team, which gathers market insights from various experts to inform predictions about currency trends and market movements. Looking back to this time in 2025, we predicted a tight range for the pound, with a slight upward trend that struggled to break through 1.3590. This period was marked by cautious sentiment as both the UK and US economies dealt with post-inflation issues. For weeks, the pair remained stable, rewarding those who used range-trading strategies.

Market Conditions and Trader Strategies

The situation is different as we enter 2026. The UK inflation rate for December 2025 hit 3.1%, surprising many as it was higher than the expected 2.8%. This halted the steady decline we saw throughout last year. In contrast, the latest US CPI was 2.5%, raising speculation about a Federal Reserve rate cut by March. This difference is leading the Bank of England to take a more aggressive stance, while the Fed seems to be taking a softer approach. As a result, GBP/USD has broken above the 1.3600 level, a point that felt far away a year ago. Recent UK retail sales showed a 0.5% increase in December 2025, further supporting the strength of the pound. In the coming weeks, traders might consider buying call options to benefit from potential upward movement. With the pair trading around 1.3680, options with strikes at 1.3750 or 1.3800 set to expire in February could capture a move towards the highs we saw in late 2024. The current implied volatility is moderate, making these options reasonably priced. A more cautious option is to use bull call spreads, which limit risk and the initial cost of the position. For instance, buying a February 1.3700 call and selling a 1.3850 call creates a defined profit zone if the pound continues to rise. This strategy takes advantage of the current trend while guarding against sudden drops. The key support level to watch is now much higher than the 1.3455 identified in early 2025. A drop below 1.3580 would indicate that the current upward momentum is weakening, and traders should reevaluate bullish positions. Those selling put options for income should consider strikes well below this level. Create your live VT Markets account and start trading now.

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