Insights 
VT 
GBP/USD experiences a downward trend after passing key support levels, with future recovery looking limited according to Société Générale’s FX analysts. The currency pair broke below the 1.3140 mark, and is now moving towards potential interim support levels of 1.2940 to 1.2920.
Currently, the Daily MACD is deep in negative territory as it reflects ongoing bearish momentum with GBP/USD. While the moving average near 1.3250 serves as a potential resistance, lacking a breakthrough at this point may prolong the current decline.
Immediate Path Analysis
With GBP/USD having broken below the key 1.3140 support level, the immediate path appears to be lower. We are now looking at 1.2940/1.2920 as the next potential area where the decline might pause. The downward momentum is strong, and traders should be positioned for further weakness in the coming weeks.
This technical breakdown aligns with the fundamental picture, as last week’s UK retail sales for October showed a surprise 0.8% contraction. In contrast, the latest U.S. non-farm payroll report from just a few days ago revealed a robust addition of over 250,000 jobs, strengthening the dollar. This economic divergence between a struggling UK and a resilient US economy supports a weaker pound.
For derivative traders, this suggests buying put options to profit from a continued slide towards the 1.2920 target. Selling call options with strike prices near the 1.3250 resistance level could also be a viable strategy, as any rallies are expected to be limited. This 1.3250 mark is a critical ceiling for the pair.
Historical Context and Future Outlook
We saw a similar pattern in late 2024 when policy divergence between the Bank of England and the Federal Reserve led to a sustained fall in the pound. That historical context suggests this trend could persist as long as the economic data follows its current course. Traders should view any move back towards 1.3250 as an opportunity to reassess bearish positions, not as a sign of a reversal.
The daily MACD indicator remains deeply negative, signaling that sellers are firmly in control and a meaningful rebound is not yet on the horizon. The recent break of the 200-day moving average has historically led to periods of increased volatility. Therefore, using options to define risk could be particularly useful in this environment.
