The British Pound has dropped against the US Dollar, now trading at 1.3367, down 0.53% due to strong US economic data. Even though the UK’s GDP growth report for November was solid, the GBP/USD pair weakened to about 1.3420. The GBP/USD remained stable for the second day in a row, around 1.3430. The Relative Strength Index showed balanced momentum with a reading of 51, moving down from higher values.

The EUR/USD Response

The EUR/USD fell to about 1.1580, reacting to strong US data and rising Treasury yields, which boosted the US Dollar. The GBP/USD pair hit four-week lows near 1.3360, reflecting the strength of the US Dollar. Gold prices pulled back to nearly $4,600 as the US Dollar gained strength, along with higher Treasury yields and some profit-taking. In the cryptocurrency world, Bitmine Immersion announced a $200 million investment in Beast Industries. Ripple saw its second day of decline, though it received initial approval for an Electronic Money Institution license in Luxembourg. FXStreet offers financial news, stressing the importance of thorough research and awareness of risks before making investment decisions. The US Dollar is currently the main market driver, as strong economic data overshadows positive news from other countries like the UK. Expectations for Federal Reserve interest rate cuts are fading because officials believe inflation is still too high. This suggests the Dollar’s strength may continue in the coming weeks. For the British Pound, this means that even positive domestic news, such as last November’s good GDP growth, is not providing support. The GBP/USD pair has fallen below the important 1.3400 level, with the trend appearing to be downward as long as US data remains strong. The latest US jobs report from December 2025 shows a non-farm payroll increase of 215,000, indicating the economy is still thriving.

Impact of Dollar Rally

The broad dollar rally is affecting all major currencies, with the Euro also declining against the US Dollar. This situation resembles past patterns, especially during the Fed’s aggressive rate hikes in 2022, when the Dollar Index (DXY) surged above 114. Today’s market feels similar, as investors prioritize yield and safety in US assets. Given the downward trend in GBP/USD, traders might consider buying put options to profit from further declines. With the pair now below 1.3370, strike prices around 1.3300 or 1.3250 may provide a good risk-to-reward opportunity in the coming weeks. This strategy allows traders to benefit from price drops while limiting potential losses to the premium spent on the option. We should also expect increasing currency volatility as these significant trends unfold. The Cboe Sterling Volatility Index (BPVIX) has risen to 9.2, its highest in three months, indicating a greater demand for options as a hedge. Traders may use strategies like long straddles if they anticipate large price moves but are unsure of the short-term direction, although the current trend clearly leans downward. Create your live VT Markets account and start trading now.

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