**The US Dollar Index Remains Stable** US tariffs are an important tool for policy and a source of public finance. The US government has reaffirmed its commitment to tariffs. Litecoin is showing positive signs, trading at around $130, thanks to increased interest from retail investors and fluctuations in the market. FXStreet and the author of this article do not provide personalized advice nor take responsibility for any errors in the content. Currently, the Pound Sterling is weak, recently hitting a two-month low around 1.3280. The short-term outlook appears negative. The US Dollar is strong, with the DXY index close to a high of 99.56, driven by a desire for safety amid political issues in France and Japan. This demand for safe assets is outweighing expectations for future US interest rate cuts. **Challenges for the Pound** The pressure on the Pound is mainly due to increasing financial concerns in the UK, especially following the government’s budget announcements in late September 2025. The UK’s Office for Budget Responsibility has lowered its growth forecast for Q4 to just 0.1%. Meanwhile, inflation remains stubbornly high at 3.5%. This situation creates difficulties for the Bank of England and impacts the currency negatively. Interestingly, the US Dollar is strong even with an 80% chance of a major rate cut by December 2025, according to the CME FedWatch tool. This indicates that global risk aversion is the main driver of the market, and this trend is unlikely to change soon. A similar pattern occurred during the global banking stress in early 2023, when the dollar strengthened despite changing forecasts from the Fed. We’ve seen this playbook before when fiscal worries impact the UK. The sharp decline in the pound after the “mini-budget” announcement in autumn 2022 is a notable example. This event showed how quickly international investors can leave the UK when confidence in its fiscal policies drops. For traders focusing on derivatives, this situation suggests preparing for more potential declines in GBP/USD. The growing demand for protection against Pound weakness, highlighted in the 3-month risk reversals, indicates that buying put options is a straightforward strategy. Traders should consider contracts expiring in November and December 2025 to take advantage of this trend. As the cost of these options increases, a more economical strategy could involve using put spreads. A bear put spread, for example, allows a trader to aim for a specific downward movement while limiting both profit potential and initial costs. This strategy is particularly effective in a market where implied volatility is rising but a total collapse isn’t expected. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now