The GBP/USD pair has been rising for two days, getting close to the 1.3500 level thanks to a weaker US Dollar. Technical signs suggest there’s potential for even more growth, backed by the Bank of England’s firm stance. On Monday, the Pound Sterling hit its highest point in ten weeks as the US Dollar fell. Recent statistics show the UK economy grew by 0.1% in the third quarter of 2025, matching expectations and boosting GBP/USD trading even with discussions about possible changes in Bank of England policies.

Impact Of US Federal Reserve Rate Cut

The US Federal Reserve’s recent rate cut is continuing to weaken the Dollar, causing lower prices overall. On Monday, GBP/USD rose to 1.3450, driven by positive UK economic data and a weaker USD, even with limited trading before the holiday break. Please note that investment decisions based on this information carry risks. FXStreet does not recommend specific assets and encourages independent research before investing, stating that they are not responsible for any potential losses or damages. The pound is building on its recent successes against the dollar, pushing towards the 1.3500 mark as we approach a shorter holiday week. This rise is mainly due to the weaker US dollar following the Federal Reserve’s recent rate cuts. The technical outlook indicates room for further gains. Differences in the central banks’ policies are becoming clearer, which supports this trend. The Office for National Statistics reported that UK inflation remained steady at 3.1% in November 2025, keeping the Bank of England cautious about making further cuts. In contrast, US inflation has dropped to 2.5%, giving the Fed a reason to ease its approach.

Buying Call Options

Looking ahead, we should think about buying call options with strike prices above 1.3500, targeting January 2026 expirations. Implied volatility for sterling is currently low, with the Cboe Sterling Volatility Index near yearly lows of 8.5, making options cheaper. This is a cost-effective way to prepare for potential gains in the new year. We’re not alone in this belief, which adds to our confidence. According to the latest Commitment of Traders report from the CFTC, large speculators have boosted their net long positions on the pound for the third consecutive week. For those willing to take on more risk, buying GBP futures contracts directly offers a direct exposure to price movements. Be aware of the risks involved in holiday trading. Market liquidity is low between now and the new year, which can lead to sudden price swings with little warning. Therefore, it’s wise to use proper position sizing and consider defined-risk strategies like bull call spreads to limit potential losses. Create your live VT Markets account and start trading now.

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