The GBP/USD is experiencing trading activity around 1.3120, though a drop to the major support level of 1.3100 is deemed unlikely. The market remains negative for GBP, but current oversold conditions suggest limited further weakening before potential recovery.

In the view of analysts, GBP has experienced sharp fluctuations recently, and despite dropping to 1.3117, it is uncertain if it will reach the 1.3100 target. A breakthrough above 1.3200 could reverse the downward trend.

Market Pressure Continues

The GBP/USD has been under pressure for over a week, with predictions maintaining a negative stance below the 1.3245 resistance level. If the pound holds below this threshold, the negative view remains intact, though short-term conditions are still oversold.

The FXStreet Insights Team consists of journalists providing market observations, with no investment advice implied. Analysis includes views from internal and external analysts, maintaining that decisions should be informed by thorough research. The articles do not offer guaranteed accuracy and recognise that investing poses potential risks and losses.

For further insights, readers are encouraged to subscribe to the Orange Juice Newsletter from FXStreet for daily expert opinions.

Given the current weakness in the Pound, we see that the 1.3100 level is acting as a significant psychological and technical floor. With the market being deeply oversold after its recent drop to 1.3117, a sharp breakdown through this support seems unlikely in the immediate term. Traders should consider that a retest of 1.3120 is possible, but a major new leg down may not materialize just yet.

Opportunities and Strategies

This technical setup suggests that selling put options with a strike price at or below 1.3100 could be a viable strategy for the coming weeks. Recent data from late October 2025 showed that speculative net short positions on the Pound reached their highest level in six months, indicating that much of the negative sentiment may already be priced in. A market this heavily short is susceptible to a reversal, making a breach of major support less probable.

Alternatively, the oversold conditions present an opportunity for a potential rebound, especially with the US Federal Reserve signaling a pause in its tightening cycle earlier this month. We could use this to position for a recovery by purchasing call options or establishing bull call spreads, anticipating a move back toward resistance. This view is strengthened by the Bank of England’s recent minutes, which hinted that rate cuts were not imminent despite slowing growth.

For those who believe the broader negative trend will hold, the 1.3245 level is now a key line of defense. Selling call spreads with strikes above this strong resistance could be an effective way to capitalize on fading upside momentum. This strategy allows us to maintain a bearish outlook while defining our risk if a stronger-than-expected rebound occurs.

Looking back, we saw similar price action in the autumn of 2023, where a sharp decline in GBP/USD was followed by a period of range-bound trading. If implied volatility remains elevated from the recent sell-off, strategies like an iron condor, which profits from the price staying between the 1.3100 support and 1.3245 resistance, could be advantageous. This approach allows traders to benefit from price consolidation rather than betting on a specific direction.

Create your live VT Markets account and start trading now.