Sterling rose 0.11% against the US dollar, with GBP\/USD near 1.3270, even as UK figures pointed to softer momentum. GDP expanded 0.6% quarter on quarter in Q1 2026, while annual growth slowed to 0.9% from 1.1%. In the US, May JOLTS job openings increased to 7.594m, above the 7.3m forecast and the downwardly revised 7.585m in April; separately, US consumer confidence improved in June as lower petrol prices followed a truce between the US and Iran. Markets were also factoring in 35 basis points of Federal Reserve tightening by end-2026, while expectations for July were for unchanged rates.<\/p>\n
On the technicals, the daily chart placed GBP\/USD around 1.3253, retaining a bearish near-term bias beneath the 50-, 100- and 200-day SMAs clustered near 1.3420. The pair was also below a broken uptrend line at 1.3468 and a former downtrend resistance line around 1.3526, with the RSI at 42. Resistance was flagged at 1.3420, then 1.3468 and 1.3526; the analysis cited limited mapped support levels below 1.3253.<\/p>\n
We see the UK economy is slowing, with Q1 yearly growth missing forecasts and recent data from the British Retail Consortium showing June retail sales fell 1.5%. In contrast, the US is dealing with a resilient labor market and hawkish signals from the Federal Reserve. This divergence between a slowing UK and a more robust US is the main theme for the coming weeks.<\/p>\n
Bank of England Governor Bailey’s concern about inflation reaching 3.2% is complicated by the weakening growth data. Meanwhile, Fed officials sound more prepared to consider rate hikes, a stance that has historically favored a stronger dollar during periods of policy divergence since the 2022 tightening cycle. We believe this growing policy gap will put downward pressure on the GBP\/USD pair.<\/p>\n
Given this outlook, we are positioning for further GBP\/USD weakness. We view the resistance around the 1.3420 moving average cluster as a strong ceiling. Buying put options with strike prices below 1.3200 for late July or August expiration seems like a prudent way to capitalize on potential downside.<\/p>\n
Another strategy is to sell call spreads with a ceiling around that 1.3420 resistance level, which would profit if the pair remains stagnant or falls. While the CME FedWatch tool indicates a 90% chance of no Fed hike in July, the probability for a September hike has now risen to 40%, supporting a stronger dollar outlook. This reinforces our view that rallies in the pound will likely be sold off.<\/p>\n\n\n\n