The GBPUSD pair is currently trading within a wide range, showing significant movement. Last week, the USD ended on a low note but has made a comeback this week, regaining most of its losses. Traders are watching the labor market closely, especially the upcoming NFP report. Right now, there’s an 89% chance of a rate cut in September, with an expectation of 55 basis points of easing by the end of the year. Strong economic data could change these expectations, while weak data may drive the dollar down further. In the UK, the Bank of England’s (BoE) recent aggressive position has been supported by robust data, including the latest UK Consumer Price Index (CPI), which exceeded forecasts. Mixed but strong Flash PMIs show inflationary pressures are still strong. The BoE remains focused on inflation, especially as long-term yields in the UK rise, reflecting market impatience with inflation controls. On the daily GBPUSD chart, the price has pulled back to the 1.3368 support level and is trying to rally towards the 1.3590 resistance. The 4-hour chart shows a clear bounce from this support, while the 1-hour chart points to the 1.3445 level as minor resistance. Upcoming US data releases to watch include ISM Manufacturing PMI, Job Openings, US ADP Employment, Jobless Claims, ISM Services PMI, and the NFP report. The GBPUSD pair seems caught between two conflicting central bank strategies, creating this wide trading range. The US appears likely to cut rates, while the UK is still dealing with ongoing inflation. This conflict keeps the price between the key support at 1.3368 and resistance at 1.3590. The August 2025 Non-Farm Payrolls report showed that the US added only 160,000 jobs instead of the expected 185,000. With the unemployment rate rising to 4.1%, the market’s prediction of an 89% chance for a Federal Reserve rate cut this month appears valid. This outlook is likely to support GBPUSD on any dips. Meanwhile, the pound remains supported by persistent UK inflation, a major concern for the Bank of England. The last July 2025 CPI reading was a high 3.1%, significantly over the target, and the August services PMI came in strong at 52.5, indicating ongoing price pressures. This hawkish stance from the BoE is prompting buyers to enter near the 1.3368 support. For derivative traders, this situation is perfect for range-bound strategies in the coming weeks. Selling an iron condor, with short strikes just outside the 1.3368-1.3590 range, could be effective. This strategy would benefit from time decay as long as the upcoming data does not cause any major breakout. However, we need to be ready for a possible breakout due to this week’s US ISM Services PMI and further comments from Fed officials. Traders expecting a large move could consider buying straddles or strangles to take advantage of volatility, regardless of the direction. It’s important to set positions before the event since implied volatility will likely rise leading up to the release. Looking back, the sharp currency swings during the 2022-2023 rate hiking cycle remind us how quickly trading ranges can break. While the current environment seems stable, conflicting economic data from the US and UK indicates that this period of calm is fragile. Therefore, we should manage risk carefully, as surprises from either central bank could lead to a significant market move.

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