The GBP/USD pair has dropped to 1.33, influenced by weak employment data from the UK. The jobless rate has increased to 4.8%, and hiring is slowing down. This data might lead the Bank of England to think about lowering interest rates. Even with concerns in the job market, many are cautious about a rate cut this year. Predictions suggest that any decrease might not happen until 2026. In contrast, the US Dollar remains steady as traders await a speech from Federal Reserve Chair Jerome Powell.

Technical Analysis Outlook

Technical analysis indicates that GBP/USD may face more pressure, especially if it closes below 1.3300. Key support is at 1.3200, while resistance stands at 1.3350 and then at 1.3434. In the US, small business sentiment fell in September, impacting the US Dollar. The NFIB Business Optimism Index dropped to 98.8, disrupting three months of positive outlooks. The Pound Sterling is an important global currency influenced by the Bank of England’s policies and UK economic data like GDP and employment figures. A strong Trade Balance supports the currency, but weak data can cause it to weaken. The recent rise in UK unemployment to 4.8% strengthens the case for the Bank of England to lower interest rates. This viewpoint gained credibility after last week’s inflation data showed a drop to 2.1%, giving policymakers more flexibility. Therefore, we expect continued pressure on the Pound Sterling against the US Dollar.

Investor Positioning Strategy

For those preparing for this shift, buying GBP/USD put options seems wise in the upcoming weeks. Targeting strike prices below the current 1.3300 level, like 1.3250 or the crucial support at 1.3200, could provide a defined-risk way to profit from potential weakness. These options would perform better if forthcoming data, such as retail sales figures—which have been declining since summer 2025—underperform expectations. On the other side, the US Dollar remains stable, especially after last Friday’s slightly higher-than-expected Producer Price Index. With Fed Chair Powell likely to stick to a data-driven approach in his upcoming speech, the contrast between a slowing UK and a stronger US economy could lead to increased volatility. This environment suggests that option strategies benefiting from price fluctuations, not just direction, may also be worthwhile. It’s important to note that while the market anticipates the next BoE rate cut in March 2026, this timeline could change quickly. Looking back at the rapid changes in policy during the banking turmoil of 2023, we know that market sentiment can shift unexpectedly. Any further weak UK data in the fourth quarter of 2025 will be closely monitored and could significantly impact the pound. Create your live VT Markets account and start trading now.

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