In the US, we currently don’t have official data on labor and inflation because of a prolonged government funding halt, the longest in history. There is optimism that a funding solution will be approved soon, possibly allowing essential economic data to be released by the end of the week.

The Pound Sterling

The Pound Sterling is the official currency of the UK and represents 12% of all foreign exchange transactions globally. It is significantly influenced by the Bank of England’s monetary policy decisions, particularly interest rate adjustments meant to keep prices stable. Strong economic indicators tend to strengthen the Pound by attracting foreign investment, while a positive trade balance increases demand for exports, further supporting the currency. Currently, the GBP/USD exchange rate is hovering just below 1.2800. As we move into the second half of November 2025, derivative traders are noticing a familiar trend. The market is weighing forthcoming UK employment data against the political uncertainty in the US, where another funding deadline is approaching. This situation could benefit options strategies that thrive on increased volatility. In the US, all eyes are on Congress to approve a short-term funding solution and prevent a partial government shutdown. Recent Consumer Price Index (CPI) data from October indicated that core inflation remains steady at 3.1%. This gives the Federal Reserve limited options, which supports the dollar. If a funding agreement is reached, it could be a positive signal for risk, likely driving the dollar lower and favoring pairs like GBP/USD. We recall the long government shutdown that occurred in late 2018 and early 2019, which led to a similar data freeze and unstable trading in the dollar. History has shown that during times of political tension, risks can overshadow economic fundamentals. It’s wise to hedge derivative positions against sudden price changes caused by unexpected political developments over the coming weeks.

UK Economic Indicators

On the UK’s side, the Bank of England is closely monitoring the economy for signs of slowdown. Recent figures from the Office for National Statistics (ONS) revealed that UK wage growth eased to 5.2% in the third quarter. We are now looking forward to this week’s unemployment data for further clarity. Any major weakness reported could increase expectations for a rate cut by the Bank of England next year, putting pressure on the Pound. This situation sets up a classic event-driven trading opportunity. Strategies such as buying straddles or strangles on GBP/USD might be worth exploring. These positions could benefit from significant price movements in either direction, whether triggered by UK labor data or a funding announcement from Washington. Currently, implied volatility for one-month GBP/USD options has risen to 8.2%, its highest level since October, indicating market expectations of a major move. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now