GBP/USD is currently around 1.3325, slightly below the 200-day Simple Moving Average of 1.3329. Traders are waiting for the Federal Reserve’s final policy decision this year. Analysts see an 86% chance of a 25-basis-point rate cut, with anticipation of a ‘hawkish cut’ in the Federal Open Market Committee’s language. The UK will soon release its GDP data for October, expecting a 1.4% annual growth and a 0.1% monthly increase. Weakness in the labor market suggests an 87% chance that the Bank of England will lower rates at its December meeting.

Earthquake In Japan

A powerful earthquake measuring 7.6 struck northeastern Japan, leading to a tsunami warning for coastal areas. This event has not impacted GBP/USD, which is showing bullish momentum, though it still needs to close above 1.3350 to test 1.3400. The Pound Sterling, the currency of the UK, is the fourth most traded currency worldwide. Its value is influenced by Bank of England policies, especially interest rate changes, and by economic indicators like GDP, manufacturing output, and trade balance. Positive economic data can strengthen the GBP, making the UK more appealing for foreign investment. Today, December 8th, 2025, GBP/USD is steady around 1.3325, just under the important 200-day moving average. The market is calm as we await major policy announcements from the US Federal Reserve this week and the Bank of England next week. This quiet period likely precedes increased market activity. The Federal Reserve is expected to deliver a “hawkish cut” on Wednesday, a move that might cause fluctuations in the markets. The CME FedWatch Tool indicates a 91% chance of a 25 basis point cut, which usually weakens the dollar. However, if the Fed suggests that this cut is a one-time event rather than the start of a prolonged easing period, the dollar might strengthen after an initial dip.

Bank Of England Pressure

We saw a similar pattern in July 2019, when the Fed cut rates but indicated a “mid-cycle adjustment.” This led to a brief decline in the dollar, which later reversed. This past behavior warns traders to be careful about pursuing the initial move post-announcement. The true direction will depend on updated economic forecasts and the press conference tone. Meanwhile, the Bank of England is facing pressure to cut rates. Recent data from the Office for National Statistics shows the UK’s unemployment rate rising to 4.5% in the three months leading to October, along with slow wage growth. These signs of a weakening labor market lead to an 87% chance of a rate cut in December, likely weighing on the Pound. Given the high risk of upcoming events, strategies that benefit from increased volatility are appealing. The CBOE FX Volatility Index for the GBP is already climbing. Therefore, buying straddles or strangles with strike prices around key levels like 1.3400 and 1.3250 could be a wise way to navigate the upcoming announcements. These strategies would profit if prices move sharply in either direction, helping to manage the uncertainty of central bank guidance. We must also monitor external risks, such as the recent earthquake in Japan. Such incidents often lead to a flight to safety, which typically favors the US Dollar as a safe-haven asset. This could add more downward pressure on GBP/USD, regardless of central bank actions. Create your live VT Markets account and start trading now.

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