Momentum Analysis
Pound Sterling (GBP) might test the major support level at 1.3370, although a pronounced increase in downward momentum is not evident. UOB Group’s analysts suggest the possibility of GBP declining to 1.3340 in the longer term.
In the past week, GBP fell to a low of 1.3418 and further down to 1.3393. During the NY session, it closed at 1.3402, marking a 0.30% decrease. Resistance levels are currently at 1.3420 and 1.3440, with a break below 1.3370 appearing unlikely.
Recent analysis noted growing downside risk with GBP now under the 1.3400 mark, reaching a low of 1.3393. Despite this, the momentum hasn’t increased notably. GBP could decline between the ranges of 1.3340 and 1.3370, provided it stays under the strong resistance level of 1.3475.
This article is compiled by the FXStreet Insights Team, which curates observations from market experts. The content includes analysis and notes from both internal and external sources.
Current Economic Perspective
Looking back to this time in 2025, we recall a bearish outlook on the pound, with a focus on a potential test of the 1.3370 support level. This historical perspective is useful as we see similar pressures building today. The downward momentum observed then provides a framework for evaluating the current market.
As of today, January 12, 2026, recent economic data reinforces a cautious view. The latest figures from late 2025 showed UK retail sales contracted by 0.9%, missing expectations, while wage growth has slowed to its lowest level in over a year. This economic softening puts pressure on Sterling against a backdrop of a more resilient US economy.
This fundamental weakness suggests that downward pressure on the GBP/USD pair is likely to continue in the coming weeks. We believe the path of least resistance is lower, mirroring the sentiment from last year but with different technical levels. Traders should therefore position for a potential decline from the current spot price.
For those looking to act on this view, buying put options with a strike price below the current market offers a direct way to profit from a move downwards. This strategy provides exposure to the downside while defining the maximum risk to the premium paid. Consider February expiration dates to allow time for the move to develop.
A more conservative approach would be to implement a bear put spread. This involves buying a put option and simultaneously selling another put option with a lower strike price. This reduces the upfront cost of the position but also caps the potential profit, making it ideal for targeting a specific price range.
Any bearish positions should be protected against a sudden reversal. We are watching the 1.2980 level as a key area of resistance. A sustained break above this point would signal that the downward momentum has faded, and would require a re-evaluation of short-term bearish strategies.
