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    GBP shows a defensive trend with a 0.2% decrease against USD, according to Scotiabank’s strategists.

    by VT Markets
    /
    Nov 12, 2025
    The Pound Sterling is gently slipping, down 0.2% against the US Dollar, according to Scotiabank. Its recovery has hit a halt after disappointing job data revealed an unemployment rate of 5%, the highest since the pandemic began. UK rate expectations appear to be stabilizing after falling due to the jobs report. While UK-US yield spreads have improved, recent gains for the Pound have been weakened by this negative data.

    The Pound’s Defensive Trade

    As we approach mid-November 2025, the Pound is trading cautiously. This follows yesterday’s underwhelming UK jobs report, which highlighted an unemployment rate of 5.0%, a new post-COVID high. The recovery in the Pound from the past month seems to have completely stopped. The report’s details were troubling: wage growth slowed to 3.5%, below the expected 3.9%. As a result, we have adjusted our outlook for any rate hikes from the Bank of England. Currently, overnight index swaps suggest there is less than a 20% chance of a rate increase in the first quarter of 2026. This economic weakness in the UK starkly contrasts with the US economy, which added a solid 210,000 jobs in October. This growing gap in economic performance is keeping the US Dollar strong and putting noticeable pressure on the GBP/USD exchange rate. It reminds us of late 2022, when different central bank policies significantly benefited the dollar.

    Potential Slide Strategies

    We are now keeping a close eye on the December 2020 unemployment peak of 5.3% as a significant level to watch. Historically, periods of uncertainty, like after the 2016 Brexit vote, saw sharp increases in implied volatility. This suggests that option prices may rise if negative trends persist. In light of this, we should think about strategies that could benefit from further declines or protect our current positions. Buying GBP/USD put options or creating bearish put spreads may be effective strategies to prepare for a potential drop in the coming weeks. These derivatives can help us manage risk while taking advantage of the current negative sentiment surrounding the Pound. Create your live VT Markets account and start trading now.

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