Insights 
VT 
Pound Sterling (GBP) has the potential to test the 1.3475 mark, with further progression unlikely. Should GBP breach 1.3475 distinctly, it could advance to 1.3505 and potentially reach 1.3530, according to analysts from UOB Group.
In recent trading, GBP rose to 1.3408 and later reached a peak of 1.3455, although significant upward momentum is absent. Support levels are identified at 1.3420 and 1.3400, with major resistance at 1.3475 and 1.3500 unlikely to be challenged.
GBP Market Analysis
Analysts observe an easing downward momentum, positioning GBP in a range between 1.3320 and 1.3475 for the short-term. If GBP maintains above the support level of 1.3360, the possibility of surpassing 1.3475 increases in the coming days.
This observation underscores movements in global currency markets, amidst various economic tensions and expectations. The FXStreet Insights Team compiles information on market trends, providing detailed analysis on currency behaviours and related topics.
Notably, other currencies have also experienced fluctuations. USD/CHF continues to face losses, and gold prices have dropped below $4,300 following recent highs, attributed to increased US Dollar strength and Treasury yield movements.
Economic Data and Currency Movement
We are seeing building upside risk for the Pound, with a key test of the 1.3475 level on the horizon. A clear break above this resistance could open the door for a further climb towards 1.3505 and possibly 1.3530. The critical support to watch on any dips remains at 1.3360.
This bullish view on Sterling is gaining support from recent economic data. This week’s inflation figures showed UK CPI unexpectedly ticking up to 2.9% for September, easing pressure on the Bank of England to consider the rate cuts that were being priced in last quarter. This shift makes holding the Pound more attractive relative to other currencies.
On the US dollar side of the pair, weakness is being driven by signs of a cooling economy. The non-farm payrolls report from early October showed a softer-than-expected gain of only 150,000 jobs, reinforcing bets that the Federal Reserve will hold rates steady at its next meeting. This contrasts sharply with the hawkish stance we saw from the Fed through much of 2024.
Given this outlook, we believe positioning for a potential breakout using derivatives is a sound strategy. Buying short-dated call options with a strike price at or above 1.3500 could provide good upside exposure if the 1.3475 resistance level is broken in the coming days. The relatively low implied volatility we’ve seen this month, hovering around 8.5%, makes this an affordable way to play the potential move.
To manage risk, we are watching the 1.3360 support level closely. A decisive break below this point would invalidate the immediate bullish outlook. Traders could consider buying put options with a strike below 1.3400 as a hedge against a sudden reversal driven by the broader risk-off sentiment.
