The GBP/USD pair fell back on Friday after hitting a weekly high of 1.3471. This drop came after US President Donald Trump remarked on the unsustainability of high tariffs on China, which boosted the US Dollar. The pair was trading above 1.3415, down by 0.12%. During Friday’s European session, the Pound held steady near 1.3470 against the US Dollar. Even though the US Dollar Index saw some selling, this showed weakness in the British currency.

Positive Movement in Trading

For the third day in a row, the GBP/USD pair showed positive movement, rising from early August’s lows of about 1.3250-1.3245. It reached the mid-1.3400s, marking a one-and-a-half-week high. However, the increase lacked strong momentum amid a generally weaker US Dollar. In other financial news, EUR/USD dropped after Trump eased tariffs on China. The Dow Jones Industrial Average made a bullish attempt, and the Canadian Dollar bounced back. Gold fell by 2% as concerns around China lessened, while USD/JPY rose due to increased demand for the US Dollar. According to FXStreet, this information carries risks and should not be considered investment advice. They recommend doing personal research before making investment decisions. Looking back, Trump’s remarks on China tariffs influenced GBP/USD around the 1.34 mark back then. Now, on October 17, 2025, the pair struggles to stay above 1.2250. The focus has shifted from trade talks to the wide gaps between central bank policies.

Changing Dynamics in Currency Markets

Years ago, dovish expectations for the Bank of England put pressure on the Pound. Today, the scenario is different, as we deal with ongoing inflation. The latest data from the ONS revealed the Consumer Price Index cooled to 3.1% in September. This situation compels the Bank of England to keep a hawkish stance, causing instability for interest rate swaps and short-term GBP options. The US Dollar is also experiencing new pressures compared to past tariff-related moves. Recent Non-Farm Payrolls data showed a slowdown, with only 150,000 jobs created last month. This indicates that the Federal Reserve’s tightening measures are fully impacting the economy, introducing uncertainty for long-dollar positions. In the weeks ahead, it’s wise to consider strategies that take advantage of this uncertainty instead of trying to predict a clear direction. A long straddle on GBP/USD, which involves buying both a call and a put option, might be a good way to prepare for a breakout before the next central bank meetings. Implied volatility is relatively low compared to the peaks seen during the economic turbulence of 2024, making such options strategies more affordable. Create your live VT Markets account and start trading now.

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