The Pound Sterling (GBP) is holding strong against the US Dollar, stabilizing as it builds on last week’s gains. Predictions for rate cuts by the Bank of England are fading, while expectations for lower rates in the US are affecting the market. This week, key economic data from the UK includes employment numbers on Tuesday and GDP, industrial production, and trade figures on Friday. The GBP/USD pair is close to its 50-day moving average at 1.3503. There’s little resistance in the upper 1.35 range, with support positioned below 1.3380.

Risks And Responsibilities

Forward-looking statements involve risks and uncertainties, meaning they may not always be accurate. The market information provided is for informational use only and should not be considered a buy or sell recommendation. Always conduct thorough personal research before making investment choices, as there are risks, including the possibility of losing your investment. Investors are fully responsible for any losses and investment risks. The information may not represent the views of related companies and does not promise error-free or timely content. No personalized recommendations are made, and the information may not be wholly comprehensive or suitable. The Pound is holding steady against the Dollar mainly due to different expectations from central banks. The market is moving away from anticipating rate cuts from the Bank of England, especially after the latest UK inflation report for July showed the headline CPI remaining at 2.3%, above the Bank’s 2% target. In contrast, there is a growing belief that the US Federal Reserve might need to lower rates soon due to a recent slowdown in US job growth. With UK employment data set to be released tomorrow and key GDP information on Friday, we could see increased short-term volatility. Strategies like buying options, such as straddles or strangles, might be wise to prepare for significant price shifts, regardless of direction. Strong UK data could bolster the Pound’s current strength, while a disappointing report might challenge it.

Trading Strategies And Comparisons

The currency pair is currently around its 50-day moving average of 1.3500, an important pivot point. For traders with a bullish outlook, buying call options with a strike price of about 1.3550 is appealing, aiming for the least resistance in the upper 1.35s. Alternatively, selling put options below the 1.3380 support level could be a good way to earn premium, expecting continued stability. This situation resembles the dynamics we saw back in 2014 when the Fed was tightening policy while the Bank of England remained steady. The recent US Core PCE Price Index, the Fed’s favored inflation measure, dropped to a two-year low of 2.5%, supporting the case for a potential US rate cut. This fundamental backdrop should continue to favor the Pound over the Dollar in the upcoming weeks. Create your live VT Markets account and start trading now.

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