November jobs and December CPI data in the UK may slightly enhance sterling’s value, continuing a trend from late November. While pound-dollar movements may benefit from a weaker dollar, euro-pound transactions remain vulnerable due to potential risk-averse events that could limit sterling’s gains. <\/p>\n
The GBP\/USD exchange rate may improve, with a chance to surpass 1.3415\/3420 and potentially reach 1.3450\/3460, driven by the existing dollar weakness. However, sterling often performs poorly during significant risk-off periods, presenting various factors to consider in market dynamics.<\/p>\n
Looking back at the patterns of 2025, we recall how strong UK data could trigger a short squeeze in sterling. A similar dynamic appears to be unfolding now at the start of 2026. Incoming data on inflation and employment could provide a modest boost to the pound. <\/p>\n
Last week’s UK inflation data for December came in at 2.3%, which was higher than the market had anticipated. This figure remains stubbornly above the Bank of England’s 2% target, suggesting interest rates may not be cut as quickly as previously thought. This strengthens the case for holding the pound.<\/p>\n
This follows the robust jobs report from last month, which showed November’s wage growth holding firm around 4.5%. Recent figures show that speculative positioning is still heavily short on the pound, creating the ideal conditions for a squeeze. Traders who bet against sterling may be forced to buy it back.<\/p>\n
For derivative traders, this suggests considering call options on GBP\/USD to capture potential upside. A break above the recent resistance at 1.2900 could open the way towards the 1.3050 level in the coming weeks. This move would be amplified if the recent mild weakness in the US dollar continues.<\/p>\n
Alternatively, the EUR\/GBP cross looks vulnerable to sterling’s strength. Put options on EUR\/GBP or selling futures could be viable strategies. We see a potential move down to test the 0.8500 support level if the UK data continues to outperform Eurozone figures.<\/p>\n
We are mindful that sterling is sensitive to global risk sentiment, a pattern we also observed throughout 2025. Any unexpected geopolitical tensions or a sharp downturn in equity markets could quickly reverse these gains. Therefore, stop-loss orders on any long sterling positions are a prudent measure.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Sterling may strengthen on UK data, though risk aversion could limit gains against the euro.<\/p>\n","protected":false},"author":62,"featured_media":17037,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39520","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=39520"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39520\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17037"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=39520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=39520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=39520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}