GBP\/USD traded at 1.3660 after falling below 1.3700, down 0.2% in the North American session on Tuesday. The pair hit a daily high of 1.3700 before easing back.<\/p>\n
US data came in weaker than expected, but the Dollar recovered some earlier losses. December Retail Sales were 0% month-on-month versus a 0.4% forecast, and Control Group sales fell -0.1% MoM versus 0.2% in November.<\/p>\n
The Employment Cost Index dipped to 0.7% in Q4 from 0.8%, according to the BLS. The report is used to gauge labour costs and is watched as an input for core inflation.<\/p>\n
In the UK, political uncertainty limited gains, with pressure on Prime Minister Keir Starmer linked to the nomination of Peter Mandelson as ambassador to the US. There is speculation that Starmer may not finish the year as Prime Minister, while remaining Labour leader.<\/p>\n
Technically, GBP\/USD stayed range-bound, with 1.3650 to 1.3700 in focus ahead of US Nonfarm Payrolls on Wednesday. A break above the yearly high of 1.3868 may open 1.4000, while a drop below 1.3650 may target 1.3508 and the 50-day SMA at 1.3471.<\/p>\n
We remember how political jitters in 2025 capped the pound below 1.3700, even when faced with weak US data. Today, the landscape has shifted, with the market far more concerned with stubborn inflation than last year’s political headlines. With GBP\/USD now hovering near 1.2750, the old technical levels are a distant memory.<\/p>\n
Last year, we saw weak US retail sales and a dipping Employment Cost Index, which pointed to economic slack. In contrast, the latest US CPI data from January 2026 came in at a persistent 3.1%, keeping the Federal Reserve on high alert. This means that unlike in 2025, any sign of economic strength could fuel bets on the Fed holding rates higher for longer.<\/p>\n
While concerns over the Prime Minister’s leadership dominated our thinking in 2025, the focus now is squarely on the Bank of England. UK inflation is proving sticky at 3.5%, well above the 2% target, forcing the central bank to maintain a hawkish stance. This economic reality is a much bigger driver for Sterling than the political noise we saw previously.<\/p>\n
With both central banks in a holding pattern, implied volatility for GBP\/USD has fallen, as seen in the CME’s CVOL index readings which are down from their late 2025 peaks. For the next few weeks, this suggests opportunities in selling options strangles or straddles to collect premium, betting on the pair remaining range-bound. This strategy profits from the consolidation we see now, unlike the breakout potential we watched for last year.<\/p>\n
The tight 1.3650-1.3700 range we observed in 2025 has been replaced by a new battleground, likely between 1.2700 and 1.2800. We should consider using limit orders to fade moves to the edges of this new, lower range. A break below 1.2700 could signal a bigger downward move, especially if upcoming US payroll data is stronger than expected.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD slips to 1.3660 as weak US data, UK politics keep pair range-bound ahead of NFP.<\/p>\n","protected":false},"author":62,"featured_media":17034,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41498","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-ca\/wp-json\/wp\/v2\/posts\/41498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41498"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41498\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17034"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}