Sterling held above a fresh three-month low of 1.3204 set last Thursday, after sliding 2% over the past two weeks. The move left cable trading just ahead of 1.3193, the 38.2% Fibonacci retracement of the 1.2100 to 1.3870 advance, while a 1.3150 floor remains the lower edge of the broader range. Daily candles with long upper shadows suggest rebounds have struggled to gain traction, even as some profit-taking emerged after overstretched conditions.
The earlier Fibonacci support at 1.3266, which marks the 76.4% retracement of 1.3140 to 1.3675, has flipped into resistance following a brief intraday push above it. Momentum signals remain bearish, although RSI is close to moving out of oversold territory. A sustained break back above 1.3266 would bring 1.3315, the 23.6% retracement of 1.3675 to 1.3204, into view and then 1.3350, the falling daily Tenkan-sen; further levels sit at 1.3274 and 1.3384. On the downside, support is flagged at 1.3222, then 1.3193, with 1.3080 below 1.3150.
Outlook Remains Negative Amid Economic and Policy Headwinds
We expect the British Pound to face continued pressure against the US Dollar in the coming weeks as Cable struggles to sustain any recovery above the 1.3204 level. While we see some minor profit-taking due to oversold daily indicators, the persistent failure to break back above the 1.3266 resistance point suggests a bull trap is forming. This weakness comes alongside recent UK economic data showing inflation hovering near 2.2% and speculation that the Bank of England may ease rates faster than previously expected.
Trading Strategy and Key Technical Levels
For derivative traders, we recommend establishing short positions on temporary bounces toward the 1.3266 and 1.3315 levels. The daily Relative Strength Index (RSI) is attempting to rise from oversold territory, which could spark brief upticks, but strong overhead resistance should cap these moves. Historically, similar technical setups have resulted in a retest of major support zones rather than a full trend reversal.
If the exchange rate breaks below the critical 1.3193 Fibonacci support, we anticipate a swift drop toward the key 1.3150 range bottom. A clean break below this level would open the door for a deeper retracement of the massive rally we saw between January 2025 and January 2026, when Cable climbed from 1.2100 to 1.3870. We suggest managing risk tightly with stop-losses placed just above 1.3350 to protect against an unexpected breakout.
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