GBP/USD remains in a corrective phase after testing April’s low near 1.3160 and rebounding, according to UOB’s Quek Ser Leang and Lee Sue Ann. In the past 24 hours, sterling was around 1.3205 in early Asian trading before sliding to 1.3164 and then recovering. The bank frames the latest move as consolidation, with near-term price action expected to stay range-bound between 1.3170 and 1.3245.
Over a 1–3 week horizon, UOB maintains a negative stance following its shift on 18 June, when spot was at 1.3300. After cable fell through 1.3240, the next downside marker was set at 1.3160, which was almost reached at 1.3164. While downward momentum has moderated, the path lower remains open if 1.3305 continues to act as resistance, leaving scope for a break beneath 1.3160.
Medium-Term Outlook Remains Negative
We see GBP/USD in a corrective phase after recently testing the year’s low near 1.2450 and rebounding. The pair is likely to trade within a range for now, but our 1-3 week view remains negative. As long as strong resistance at 1.2650 caps the upside, we see a significant chance for a break below 1.2450.
This bearish view is reinforced by recent economic data showing UK retail sales unexpectedly fell by 0.5% in May 2026, while the latest jobs report showed unemployment ticking up to 4.5%. In contrast, the US Federal Reserve is maintaining a hawkish stance due to robust labor markets, strengthening the dollar. These diverging economic outlooks are likely to continue putting downward pressure on sterling.
Options Positioning and Market Sentiment
For derivative traders, this suggests that selling call options or buying puts on any rallies towards the 1.2650 resistance level could be a viable strategy. The implied volatility for GBP/USD options has remained relatively low, making puts an attractive way to position for a potential break below the key 1.2450 support. We feel the market is currently underpricing the risk of a further decline.
Furthermore, the latest data from the CME shows that speculative net short positions on sterling have increased for the third consecutive week, indicating a growing bearish sentiment among large traders. This pattern is reminiscent of late 2022, when similar stagflationary concerns led to a sustained period of sterling weakness against the dollar. We expect this trend to continue as long as price remains below that key resistance.
