Sterling pushed higher against the dollar, with GBP/USD climbing to 1.3397 and ending the session at 1.3391, up 0.29%. The pair briefly dipped to 1.3329 after trading around 1.3345, before rebounding sharply. Near-term price action points to a test of 1.3410, while 1.3445 remains a tougher level. To keep the upward momentum intact, support is seen at 1.3370 and the pair needs to stay above 1.3350.
On a 1–3 week view, the positive bias dates from 30 June when spot was 1.3255, with attention then on whether sterling could reach 1.3355. After clearing 1.3355, the market focus shifted to 1.3410 on 3 July with spot at 1.3345, despite overbought conditions. A move above 1.3410 would open the way to 1.3445, while only a drop below 1.3300—after prior ‘strong support’ at 1.3280—would undermine the advance.
Drivers of GBP/USD Strength and Trading Strategies
Given the sharp advance in GBP/USD, we see further strength towards the 1.3410 resistance in the coming sessions. This upward pressure is reinforced by the latest UK inflation data for May 2026, which showed consumer prices holding firm at 2.3%, feeding expectations that the Bank of England will delay any potential rate cuts. The strong momentum suggests buying on minor dips might be a viable strategy.
For derivative traders, this is an opportune moment to consider buying near-term call options with strike prices just above the 1.3410 level. A decisive break of this resistance could trigger a rapid move higher, making these positions profitable. The CBOE’s GBP Volatility Index (BPVIX) has also seen a slight uptick to 7.8, indicating the market is pricing in more movement, which supports using options strategies.
Key Levels, Risk Management, and Outlook
If the pair breaks and holds above 1.3410, our focus will shift to the next significant resistance at 1.3445. This view is further supported by the most recent US non-farm payrolls report from last Friday, which showed job creation slowing to 165,000, slightly below forecasts and potentially capping US dollar strength. Historically, the 1.3450 area has been a point of reversal, so we would monitor price action closely around that level for signs of exhaustion.
Our positive outlook on the Pound will only be invalidated if the price falls below the 1.3300 support level. A clean break below this point would signal that the upward momentum has faded, and we would advise traders to unwind long positions. This level should be treated as a key line for managing risk on any bullish trades.
