The GBP/USD pair is trading at about 1.3440 during Asian hours as traders await the UK’s Q2 GDP report. The Office for National Statistics is expected to announce a growth rate of 0.3% from the previous quarter and 1.2% year-over-year. Traders are being cautious due to the possibility of delays in the US jobs report, as the government may be approaching a shutdown. President Trump has hinted at significant federal job cuts if Congress does not pass a funding bill.

Trade Uncertainty and Tariff Plans

More market uncertainty comes from President Trump’s tariff plans. A 100% tariff could be placed on imported pharmaceutical products unless they are produced in the US. The Pound Sterling is the official currency of the UK and is the fourth most traded currency in the world, accounting for 12% of foreign exchange transactions. The Bank of England’s monetary policy greatly influences the Pound, with interest rate decisions depending on inflation targets. Economic indicators like GDP and employment are crucial in determining the value of the Pound. A positive Trade Balance can strengthen the Pound, reflecting high demand for exports. These factors directly impact how the Pound Sterling performs in the market. While GBP/USD trades quietly around 1.3440, the market is eagerly awaiting the final UK Q2 GDP figures. Expectations are for a steady 0.3% growth, which would confirm the modest economic resilience observed earlier this year. Any significant change from this estimate could lead to a sharp movement in the pound.

Impact of UK and US Economic Reports

The upcoming UK data is essential for predicting the Bank of England’s future actions, especially since it held interest rates steady at 5.0% in August 2025, similar to the peak seen in early 2024. A stronger-than-expected GDP reading could raise speculation about another rate hike to combat persistent inflation, currently at 2.9%. This scenario would likely push GBP/USD higher, while a weak report could suggest the end of the bank’s rate hikes. On the US side, significant uncertainty looms with a potential government funding freeze. This situation could delay important economic data, including the crucial Nonfarm Payrolls report. The disruption caused by the 35-day shutdown in late 2018 and early 2019 increased market volatility and pushed investors toward safe-haven assets. New tariff threats are adding to the instability, which could disrupt global supply chains and increase inflation. The proposed 100% tariff on certain pharmaceutical imports and high levies on other goods create a volatile environment for risk assets. This renewed focus on trade protectionism recalls policies from 2018 that led to sharp market fluctuations and complicated the Federal Reserve’s monetary policy decisions. Given these mixed influences, derivative traders should brace for potential spikes in volatility in the coming weeks. Options strategies like buying straddles on GBP/USD could be effective, capitalizing on large price movements in either direction following data releases or political announcements. The uncertainty surrounding the timing of the US jobs report means the UK GDP release could serve as the primary near-term catalyst. Create your live VT Markets account and start trading now.

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