### GBP/USD Rises Amid Economic Turmoil The US is facing a potential government shutdown because Congress hasn’t approved a budget by the start of the fiscal year on October 1. Democrats tried to resolve this with two budget reconciliation bills, but House Republicans did not participate in discussions or readings. On Wednesday, the British Pound reached its highest level against the US Dollar since September 24. This surge was influenced by a weak ADP Employment Change report and concerns about the ongoing US government shutdown. At the moment, GBP/USD is trading around 1.3512, reflecting a 0.50% increase for the day. Meanwhile, the US Dollar Index is hovering near 97.50, hitting a one-week low. With the pound strengthening against the dollar, we expect the GBP/USD pair to move toward the 1.3500 mark. This rise is driven by a hawkish Bank of England and weakness in the US economy. Derivative traders might want to prepare for this upward trend to continue in the upcoming weeks. ### Bank of England’s Influence on Currency In the UK, the Bank of England (BoE) is worried about persistently high inflation, which supports the pound. The latest Consumer Price Index (CPI) data from August 2025 shows inflation at 2.9%, significantly above the 2% target. As a result, the BoE is unlikely to cut interest rates soon, keeping UK interest rates appealing and bolstering the currency. On the other hand, the US government shutdown is creating major uncertainty and blocking important economic data. The 2018-2019 shutdown demonstrated how a lack of key reports, like the Non-Farm Payrolls, could unsettle markets and weaken the dollar. This situation complicates the Federal Reserve’s ability to make informed decisions, adding to the dollar’s troubles. This creates a clear policy divergence. As expectations rise for Fed interest rate cuts due to slowing US economic indicators, like the ISM Manufacturing PMI dropping to 48.5, the contrasting stance of the BoE strengthens the case for a higher GBP/USD. For traders looking to take advantage of this, buying call options on GBP/USD could be a smart move. A strike price near 1.3600, with an expiration in November 2025, would enable traders to benefit from potential gains while clearly defining their maximum risk. Given the data disruptions in the US, we also foresee a rise in implied volatility, making selling put options a viable strategy for generating income, assuming the upward trend continues. Create your live VT Markets account and start trading now.

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