GBP/USD has fallen to 1.3116, hitting a six-month low and decreasing by over 2% in October. The Pound has dropped in nine of the last ten trading days, moving from 1.3450 to around 1.3100. It has fallen below the 200-day Exponential Moving Average at 1.3275, indicating more losses may be ahead. The Federal Reserve recently cut interest rates, but Chair Jerome Powell’s cautious comments during the U.S. federal shutdown changed market expectations. This shifted bets on interest rates, postponing a hoped-for rate cut and strengthening the USD. As a result, GBP/USD has declined since mid-October.

The Pound Sterling Overview

The Pound Sterling, the fourth most traded currency in the world, is issued by the Bank of England. It plays a vital role in forex markets, with GBP/USD making up 11% of transactions. Key data, like GDP and PMIs, affects its value—strong economic reports may enhance the GBP, while weak data can lead to declines. The Trade Balance measures export earnings against import costs, influencing the Pound’s strength. A positive balance boosts the currency, while a negative one weakens it. Current market conditions are challenging, requiring thoughtful trading strategies amidst uncertainty. The Pound Sterling is struggling against the US Dollar, approaching the 1.3100 level after hitting a six-month low. This downward trend is clear, as it has dropped in nine of the last ten trading sessions. For derivative traders, this trend suggests that bearish positions could remain profitable in the upcoming weeks.

Impact of US Economic Indicators

The strength of the US Dollar is a significant factor, especially after the Federal Reserve’s recent cautious stance on future rate cuts. Recently released Core PCE Price Index data for September showed higher-than-expected inflation at 3.9% year-over-year. This persistent inflation likely makes a near-term rate cut less probable, keeping the dollar strong. On the UK side, recent data isn’t favorable for the Pound. Last week, UK retail sales for September dropped by 1.2% compared to last year, indicating weak consumer spending. This softness gives the Bank of England little incentive to raise rates. In this environment, buying GBP/USD put options seems like a straightforward strategy. These options would profit if the price continues to drop. It’s important to watch implied volatility, as an increase could raise the cost of these puts while also indicating growing market uncertainty. The technical outlook supports a bearish view, as Cable has clearly dropped below its 200-day exponential moving average near 1.3275. As of October 31, 2025, this is generally considered a sign that the longer-term trend is negative, which may attract more sellers. For a more defined risk approach, consider a bear put spread, where you buy a put option and sell another put at a lower strike price. This strategy limits potential profits but also lowers initial costs and risk. Create your live VT Markets account and start trading now.

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