**GBP/USD and Jobless Data Impact** The Federal Reserve’s actions have weakened the US Dollar, causing the US Dollar Index to drop by 0.40% to 97.73. In the UK, GDP figures are expected to show a slight 0.1% rise for October. Market watchers are looking forward to the Bank of England’s policy decision next week, where a rate cut to 3.75% is expected. The technical outlook for GBP/USD suggests it could move towards 1.3450 if it closes above 1.3400. Currently, the British Pound appears strong against the US Dollar this week. **Trading Strategy and Event Risks** The rate cut by the Federal Reserve, along with weak jobs data, is clearly putting pressure on the US dollar. We should position ourselves to take advantage of this trend. The GBP/USD pair is likely to rise, especially since it’s trading above the 1.3400 level. This dollar weakness is the main factor we should focus on in the near future. With this positive momentum, it may be wise to buy call options on GBP/USD, targeting strike prices around 1.3450 or 1.3500. This strategy lets us benefit from further gains while managing our risk before next week’s important events. This situation feels similar to the significant downturn of the dollar we saw in late 2023, when the market began to expect a policy shift from the Fed. However, we must be careful about the Bank of England’s rate decision on December 18. Although a 25 basis point cut is largely anticipated, any indication that the BoE is more worried about the UK economy than expected could quickly reverse the pound’s gains. We will closely watch their forward guidance for hints of a more aggressive easing cycle. With both US Nonfarm Payrolls and the BoE decision scheduled for next week, we can expect increased volatility. We can prepare for this by purchasing option straddles, which would benefit from a significant price move in either direction. This strategy protects us if the market has misjudged the central banks’ intentions, which could lead to a sharp correction. To provide some context, the recent US jobless claims figure of 236K is significantly higher than the numbers from two years ago. In the week ending December 9, 2023, claims were a healthier 203K. Additionally, the BoE’s expected cut to 3.75% represents a major policy shift from early 2024, when the Bank Rate was firmly held at 5.25% to tackle ongoing inflation. This historical perspective highlights the severe economic slowdown influencing central bank policy. Create your live VT Markets account and start trading now.

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