Insights 
VT 
Pound Sterling Bearish Strategies
Pound Sterling (GBP) may decline to 1.3385 before rebounding. However, the major support at 1.3325 is unlikely to be reached. In the short term, downward momentum has increased slightly, and GBP could fall to 1.3385 before a recovery is anticipated. Current resistance levels are at 1.3445, followed by 1.3465.
Over the past weeks, GBP was expected to trade within a range. The previous day saw a low of 1.3394, which was unexpected. This movement has led to a slight increase in downward momentum. It remains uncertain if GBP has sufficient momentum to reach the previous low near 1.3325. If GBP rises above 1.3485, it could signal that the downward trend has diminished.
Given the potential for a drop towards 1.3385, we are looking at short-term bearish strategies. Buying put options with strike prices near 1.3400 could be a direct way to position for this move. The focus should be on short-dated options expiring within the next couple of weeks to capture this specific, anticipated dip.
This downward pressure on the Pound is supported by recent economic data. The UK’s September inflation report showed CPI holding stubbornly at 3.1%, keeping the Bank of England from signaling any rate cuts in the near future. This contrasts with a steady US economy, where the last non-farm payrolls report showed a solid 195,000 jobs added.
Bearish Strategies and Risk Management
However, the expectation that major support at 1.3325 will hold suggests a more cautious approach. A bear put spread, such as buying a 1.3400 put and selling a 1.3350 put, would capitalize on the modest decline while defining our risk. Selling out-of-the-money call options above the 1.3485 resistance level could also be a viable strategy to collect premium while the downward bias persists.
We are not seeing the kind of panic that gripped the market during the Sterling crisis of late 2022, when the currency saw massive, unpredictable swings. The current momentum appears more orderly and driven by interest rate differentials. This environment supports strategies that profit from measured declines rather than extreme volatility.
