The GBP/USD pair remains strong, staying above the 200-day moving average after a recent rally. A recent DMP survey shows that while wage growth is slowing, this is not expected to stop the Bank of England from cutting rates further. In the next year, companies expect annual wage growth to drop to 3.6%, down from 3.8% in October. The inflation forecast for next year remains steady at 3.4%, the same as the last four months, while the three-year inflation outlook has slightly risen to 3.0%. The swaps curve indicates a likely decrease of 66 basis points in the policy rate, predicting it will hit a low of between 3.25% and 3.50% over the next year. It is expected that the GBP will continue to lag against other currencies soon. This information comes from the FXStreet Insights Team, which collects market insights from reputable sources and collaborates with external analysts. As of December 4, 2025, the Pound shows temporary strength above its 200-day moving average of 1.3326. However, the expected slowdown in wage growth to 3.6% suggests this strength may not last. This presents a good chance to consider strategies that could benefit from a possible decline in the currency’s value. Traders might think about buying put options on GBP/USD with strike prices below 1.3300. The market is already factoring in 66 basis points of rate cuts from the Bank of England in the coming year. This strong expectation for monetary easing makes puts a straightforward way to prepare for the predicted decline in the pound. Recent statistics support this view. Last week’s preliminary Q3 GDP data for 2025 showed a slight contraction of 0.1%. This weak growth puts more pressure on the Bank of England to cut rates sooner to help the economy. Such data offers a solid reason for the pound to weaken, despite its current technical support. Looking back, a similar trend occurred in late 2019 before the easing cycle of 2020, where market expectations for rate cuts outpaced actual moves by the central bank. In contrast, the US Federal Reserve’s recent comments indicate a steady policy approach, creating a clear divergence that favors the US dollar. This situation makes a short GBP/USD position particularly appealing. With expectations that the pound will underperform, traders may also find opportunities in other currency pairs. We suggest buying call options on EUR/GBP, as this could effectively profit from Sterling weakness without being influenced by shifts in US dollar sentiment.

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