Market Reaction And Technical Backdrop
Earlier, GBP/USD fell about 0.7% on Wednesday, dropping below 1.3300. The move extended a pullback from the late-January high near 1.3870, with the pair trading below both key daily moving averages. The price action over the past two weeks had been mixed, but Wednesday’s bearish candle pointed to a downside break. The updates were published by the FXStreet Team, a group of economic journalists and FX specialists. The Bank of England’s decision to hold rates has caught many off guard, fueling a sharp rally in GBP/USD above 1.3300. We saw UK CPI running stubbornly above the 3% mark through late 2025, so this hawkish stance suggests policymakers are serious about inflation. This reinforces the view that Sterling may have found a near-term floor. For those expecting further upside, buying call options is a direct way to participate with a defined risk. We could consider looking at April or May 2026 expirations with strike prices around 1.3450 and 1.3500 to capture the next leg up. Although implied volatility has likely spiked on this news, it reflects the market’s new-found conviction in the pound. A more conservative approach involves selling put options to collect premium, betting that the recent low will now act as strong support. We saw how the market aggressively defended the 1.3250 area during the sell-off in early 2025, making strikes below this level potentially attractive. This strategy profits from both a rising price and time decay, assuming the pair doesn’t reverse sharply.BoE Fed Policy Divergence
This move is amplified by the growing policy divergence between the BoE and the US Federal Reserve. We note that recent US Non-Farm Payrolls data for February 2026 came in below expectations at 195,000, while core PCE inflation is softening toward 2.5%. This contrast makes holding the higher-yielding pound more attractive than the dollar for the time being. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
