Insights 
VT 
GBP/USD Remains Steady
GBP/USD remained steady at the start of the week, trading above 1.3550. The pair stayed within a narrow range as market participants awaited the upcoming Federal Reserve and Bank of England meetings.
On Friday, the US Dollar gained support due to safe-haven demand following increased geopolitical tensions between Israel and Iran. The GBP/USD pair had ended the previous week on negative ground but recovered losses, trading at about 1.3570 on Monday morning.
Technical analysis suggests a weakening in the bullish bias, with GBP/USD hovering near the ascending channel pattern. It remains above the nine-day Exponential Moving Average, indicating continued short-term strength.
The 14-day Relative Strength Index sits above 50, supporting a bullish outlook. The Pound Sterling maintained strength against the US Dollar, reaching a 39-month high above 1.3600.
After a consolidation phase, GBP/USD regained traction mid-week, peaking near 1.3635, its highest point since February 2022. This market movement indicates a persistent upward trend, reflecting the exchange rate’s strength over the past few weeks.
Market Positioning and Central Bank Meetings
The earlier part of the week saw GBP/USD stabilising above 1.3550, showing little appetite to break out of its range as traders narrowed their focus on policy signals from central banks. Market positioning became visibly cautious, and rightly so, because both the Federal Reserve and the Bank of England had key meetings looming. These events tend to deliver new information regarding interest rates and economic outlooks, which can shift sentiment and direction rather quickly.
On Friday, there was a clear move into the US Dollar. This stemmed not from better data or hawkish Fed rhetoric, but from a dash for safety following increased political strains between Israel and Iran. The Dollar often draws buying interest in moments like this—where risk-off winds begin to pick up—driving other currencies like Sterling briefly lower. Yet, despite the geopolitical noise pushing the pair down into the weekend, the Pound began this week clawing back lost ground, with GBP/USD inching up to around 1.3570.
Technically, traders watching the chart patterns will have noticed something important. The pair is still trading above the nine-day Exponential Moving Average (EMA). That position tends to favour movement to the upside in the near term, indicating there is reluctance for sellers to take firm control. However, we can also see weakening momentum—the upward drift is fading, hinting that buyers are hesitating around these levels. This is perhaps most clear from the Relative Strength Index (RSI), which remains above 50, maintaining a bullish signal, though not aggressively so.
Past price action offers more detail. The Pound had earlier reached beyond 1.3600, marking the highest level it’s seen since early 2021—specifically February 2022. That jump to 1.3635 shows a market that has been trying to build on gains after breaking out of a prolonged holding pattern. That rebound did not occur randomly—it followed a meaningful period of consolidation, where the pair traded within tighter bands before finally pushing higher.
In light of this backdrop, price levels such as 1.3550 and 1.3630 demand attention. These act as near-term support and resistance, framing the zone in which activity is likely to concentrate over the next week or two. A close below the nine-day EMA, particularly if it’s accompanied by weakening RSI, might invite a move lower toward the next support region around 1.3480. Resistance above 1.3635, if broken decisively, puts 1.3700 in play.
Risk Management and Geopolitical Impact
Those of us managing derivative exposure should be measuring risk carefully around these inflection points. We’ve seen sterling firm up in part due to calmer UK political dynamics and less aggressive inflation readings, but that may soon be tested depending on the BoE’s tone. Meanwhile, Fed policy remains tightly tethered to inflation data and labour market strength, which has been surprisingly resilient of late. Should the Fed express concern about inflation persistence, the Dollar could regain lost ground swiftly.
Volatility tends to cluster around interest rate decisions and forward guidance, so pricing in larger intraday swings this week would be reasonable. It might make sense to pay closer attention to implied volatility, which in recent sessions has been trending lower, suggesting the market may be caught off guard if central banks surprise. Using straddle or strangle strategies may be worth revisiting for those trading options on GBP/USD, particularly given how close we are to multi-year highs.
It’s also worth noting how geopolitical risks have started to reassert themselves onto trading screens. Even if short-lived, flare-ups can trigger fast gains in global reserve currencies and conversely, abrupt drops in higher-yielding or more politically exposed ones. Option premiums could be underestimating this risk if markets are putting too much weight on inflation alone.
In sum, we remain patient but alert. Price levels are tight, directional bias is softening, but the schedule ahead—both in terms of central banks and geopolitical flashpoints—creates plenty of opportunity, as long as position sizing reflects the reality of the risks ahead.
