Pound Sterling (GBP) is slightly rising against a weaker US Dollar (USD) but is dropping in value compared to the Euro (EUR). Recent UK data shows a steeper decline in the July Construction PMI, which fell to 44.3, the lowest in five years. A UK think tank indicates that Chancellor Reeves faces a GBP 51 billion shortfall to address in the October budget. Meanwhile, market prices show a steady trend, reflecting a bullish reversal against the USD from last Friday. The daily GBP chart suggests that the GBP could rise above the Monday high of 1.3330. Resistance is noted at 1.3365, while support levels range from 1.3265 to 1.3275. This information is for informational purposes only and shouldn’t be taken as advice to buy or sell assets. There are risks involved, and thorough research is encouraged before any investment decisions. There are no guarantees about the accuracy or timeliness of this data. Investing in open markets carries risks, including the possibility of losing the entire investment. The investor is fully responsible for any risks, losses, and costs. Currently, the Pound shows mixed results; it is gaining against a weaker US Dollar but losing against the Euro. This situation suggests that the recent move in GBP/USD is more about Dollar weakness than Sterling strength. The market seems to be adjusting to these conflicting signals. The US Dollar’s recent drop follows last week’s July 2025 jobs report, which revealed a smaller-than-expected payroll increase of just 160,000. This lowers expectations for tightening policies from the Federal Reserve, providing GBP/USD a chance to move higher soon. The pair is testing the 1.3330 level, with potential to reach 1.3365 if the Dollar continues to drop. However, we should pay attention to the troubling picture in the UK. The July Construction PMI figure of 44.3 is the worst since the economic shocks of 2020, confirming a growing slowdown. Recent data also shows that UK manufacturing output has contracted for the second quarter in a row. In light of this, one strategy is to consider short-dated call options on GBP/USD to capitalize on potential near-term increases toward 1.3365. This approach allows participation in the rally while limiting risk. It’s a tactical response to weak US data rather than a vote of confidence in the UK economy. Looking ahead to autumn, the £51 billion budget shortfall poses a significant risk for Sterling. We remember the market volatility surrounding UK fiscal announcements in late 2022. The upcoming October budget might cause similar price fluctuations as the market reacts to potential tax increases or spending cuts. Therefore, it’s wise to prepare for increased volatility in the coming weeks. Buying long-dated straddles or strangles on GBP/USD could be a smart move, as this strategy profits from large price swings in either direction, given the uncertainty surrounding the UK’s fiscal and economic future.

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