The Pound Sterling (GBP) remains stable in calm market conditions, influenced by broader currency trends. Scotiabank’s Chief FX Strategists, Shaun Osborne and Eric Theoret, note that technical indicators suggest potential for a GBP rise, with support around 1.3320.
The EUR/GBP is supported by rising Eurozone yields, compressing yield spreads with UK Gilts. With no UK data reports, sentiment depends on major currency trends, indicating EUR/GBP may stay resilient on potential downturns.
Technical Indicators And Bullish Trends
The previous rise in the pound saw it surpass the 1.3284 retracement resistance. Technical indicators point to bullish prospects, with potential intraday gains around the 50% retracement level. Bullish trends are foreseen if above the 1.3355/65 range, with a support level at 1.3320.
This analysis is provided by the FXStreet Insights Team, which compiles market observations and insights from experts. Their content is sourced from both external specialists and internal analyses.
The pound is currently quiet, but we see technical signals suggesting it’s building momentum for a move higher. Key support to watch is near 1.3320, with a break above 1.3365 likely triggering further gains. This follows the solid rise we saw midweek, which pushed us past the significant 1.3284 retracement level from the Sep/Nov 2025 decline.
Bullish Technical Outlook For Sterling
This bullish technical outlook for Sterling is supported by fundamentals, with the UK’s November 2025 inflation report coming in at 3.1%, surprising the market which expected 2.9%. This persistent inflation will keep pressure on the Bank of England to maintain its restrictive stance into the new year. Traders should therefore consider options strategies that profit from a potential upward breakout in GBP/USD, such as buying call options with strikes above 1.3400.
However, we must watch the Euro, as rising yields in the Eurozone are keeping the EUR/GBP cross supported on any dips. For instance, the German 10-year bund yield has recently climbed to 2.65%, narrowing the rate differential with UK gilts. This suggests that any rally in GBP/USD could be less pronounced than a rally in EUR/USD, making pairs trading an interesting consideration.
On the other side of the pair, the US dollar has softened after recent comments from the Federal Reserve hinting at a policy pause in early 2026. This quiet “coiling” pattern in the pound suggests that implied volatility is relatively cheap right now. We could look at buying straddles or strangles to position for a significant price move in either direction, especially with year-end liquidity expected to thin out in the coming weeks.
