GBP/USD is on the rise, moving up to around 1.3450 thanks to mixed-to-positive data from the UK. The Pound Sterling is bouncing back from its 200-day EMA near 1.3270, although it is encountering resistance at the 50-day EMA. This bullish momentum is fueled by limited U.S. data caused by the ongoing government shutdown. The lack of data is creating uncertainty and affecting the Federal Reserve’s decisions on interest rates. Markets now expect two more rate cuts this year, influenced by the data gaps stemming from the shutdown.

The History Of The Pound Sterling

The UK Pound Sterling is the oldest currency, first introduced in 886 AD. It accounts for 12% of global forex transactions. The Bank of England controls its value, aiming for a 2% inflation rate. High inflation often leads to rising interest rates, making the UK more attractive to investors. Economic indicators like GDP, Manufacturing and Services PMIs, and trade balance greatly affect the Pound’s value. A positive trade balance boosts demand for UK goods, strengthening the currency. In summary, GBP/USD’s growth is driven by UK data and Federal Reserve actions in a climate of limited U.S. information. Expert technical analysis supports economic insights by monitoring these market shifts. On October 17, 2025, the focus for GBP/USD is the 50-day EMA around 1.3450. Recent UK inflation data for September showed a 2.3% rate, slightly above the Bank of England’s target, providing fundamental support for the pound. This technical resistance level suggests a good opportunity to sell options premium, as the pair may struggle to break above it in the short term.

Current Market Dynamics

The U.S. government shutdown, now in its fourth week, is restricting economic data, forcing the Federal Reserve to rely on outdated information. Markets expect two more interest rate cuts this year, which continues to weaken the U.S. dollar. Without significant data releases, like the October Non-Farm Payrolls report, the Fed’s dovish stance is the main influence on the dollar. For derivatives traders, this sets up a strategy to sell call options with a strike price slightly above 1.3450, betting that technical resistance will hold in the coming weeks. Remember the volatility during the central bank tightening cycles of 2022 and 2023; now, with a steady BoE and a cutting Fed, there’s a clearer bias against the dollar. This policy divergence between the two central banks is becoming the key factor. However, it’s crucial to remain cautious about a sudden resolution to the U.S. government shutdown. A quick return of positive economic data could rapidly change the dollar’s weakness. Therefore, putting put options with a strike below the 200-day EMA at 1.3270 could be a useful hedge against any unexpected weakness in the pound. This creates a well-defined risk profile while we await GBP/USD’s ability to break through current resistance. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now