### GBP/USD Technical Outlook The technical outlook for GBP/USD appears negative. This is due to bearish moving average trends and weak momentum indicators. The recent bear-crosses and the 14-day momentum indicator suggest a potential halt in recovery. Currently, GBP/USD is hovering around the 1.3300 level. This seems to be a phase of pressure building ahead of the Bank of England’s (BoE) decision. The market is quiet, which often leads to significant moves, making the next few weeks crucial. We see this consolidation as a chance to prepare for the volatility that may follow the announcement. ### BoE and Fed Policy Divergence The current technical setup, showing bearish moving averages and weak momentum, indicates that the easiest path may be downward. This view is supported by recent economic news. For instance, UK inflation for July 2025 unexpectedly dropped to 2.1%, reducing pressure on the BoE to act aggressively. Additionally, a report from the Office for National Statistics revealed that UK retail sales fell for the second consecutive month, highlighting a sluggish economy. We see similarities between the current market and late 2023 when similar consolidation took place before the BoE hinted at ending its rate hikes. At that time, the pound sharply declined after the central bank confirmed its dovish approach. The weak UK Construction PMI, which is at its lowest since the 2020 pandemic lockdowns, reinforces the chance of a similar outcome. Given this bearish outlook, we should explore strategies that profit from a potential drop in the pound’s value against a strong dollar. Buying GBP/USD put options with strike prices below the 1.3300 support level, targeting perhaps 1.3200 or 1.3150, allows us to speculate on this move while defining our risk. The premium for these options represents the maximum loss we could face on this trade. The strength of the US Dollar adds another layer to our strategy, as it offers little support for the pound. Recent U.S. data showed that core PCE, the Fed’s preferred inflation measure, remains steady at 2.8% year-over-year. This suggests that the Federal Reserve has no immediate reason to weaken the dollar with interest rate cuts. The policy divergence between a potentially dovish BoE and a steady Fed makes a strong case for a lower GBP/USD in the coming weeks. Create your live VT Markets account and start trading now.

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