The GBPUSD reached a new high of 1.35558, the highest since 18 August, surpassing Friday’s high of 1.35541. Buyers tested the waters above a resistance point, but momentum has since cooled, causing the pair to retreat.
Currently, the price finds support at the 61.8% retracement from the 11 September high, at 1.35397. This level is critical for traders; remaining above suggests a bullish bias, while a drop below could indicate a failed breakout.
A Balancing Act
In the broader view, the struggle to maintain gains after surpassing Friday’s high points to a balancing act between buyers and sellers. If support at 1.35397 holds, a push higher is possible, with targets between 1.3576 and 1.35918.
However, falling below this support with momentum could shift the market downside. Key moving averages, including the 100-hour, 100-day, and 200-hour moving averages, lie between 1.3446 and 1.34735 and would become potential targets if the price continues to decline.
The pound has pushed to a new multi-week high against the dollar at 1.35558, but we see it is struggling to maintain altitude. This hesitation comes right after last Friday’s rally, which was fueled by a weaker-than-expected US jobs report. The key level to watch now is 1.35397; holding above it keeps the immediate bullish outlook alive.
Strategies For Traders
Given this setup, traders who believe the pound has more room to run could consider buying call options with a strike price above 1.3576. This view is supported by recent data showing UK inflation for August 2025 remained stubbornly high at 3.1%, putting pressure on the Bank of England to maintain its hawkish stance. This contrasts with the US, where cooling wage growth is giving the Federal Reserve reason to pause.
If the price breaks below 1.35397, however, it signals that the breakout has failed and confidence is waning. In this scenario, buying put options or establishing bear put spreads would be a logical response to target the support zone around 1.3473. We saw a similar sharp rejection in the spring of 2024 when rate expectations diverged, leading to a rapid 300-pip drop over two weeks.
The indecisive price action suggests a “tug-of-war” is happening, which could increase short-term volatility. For those uncertain about direction but expecting a significant move, a long straddle or strangle strategy could be appropriate. This allows a trader to profit whether the pound breaks decisively higher or reverses sharply lower in the coming weeks.
