The Pound Sterling is falling against the US Dollar for a third straight day. The GBP/USD pair is now near 1.3370 because the US Dollar is gaining strength as hopes rise for a US-China trade deal. Analysts from UOB Group believe the GBP/USD will likely trade between 1.3385 and 1.3435. If the Pound rises above 1.3475, it may reach up to 1.3505, and even test levels around 1.3530.

US-China Trade Tensions

During Asian trading on Tuesday, the GBP/USD pair dropped to about 1.3390. The US Dollar is gaining due to reduced tensions between the US and China. Traders are waiting for the UK Consumer Price Index (CPI) data, which is expected on Wednesday. This data could give clues about the Bank of England’s future actions. Other markets are also reacting. Gold and silver prices have fallen due to the strength of the US Dollar and trade optimism. Bitcoin and major cryptocurrencies have also slipped as global economic uncertainties persist. The corporate Bitcoin landscape is changing, with a 99% drop in inflows. There are several “Best Brokers” guides available that offer details on trading conditions, regulations, and broker features worldwide.

Bank of England’s Inflation Outlook

The Pound Sterling continues to decline against the US Dollar for three continuous days, bringing the GBP/USD pair close to 1.2450. This decline is a response to recent inflation data and a reassessment of central bank policies. It feels similar to the turbulent times we experienced in early 2020. The latest UK CPI reading for September 2025 is 4.2%, which is a significant decrease from previous highs but remains above the Bank of England’s 2% target. This ongoing inflation, along with slowing growth, places the BoE in a tough spot. We expect they will maintain interest rates at 5.5% in their November meeting, which is likely limiting any significant strength in the Pound. In contrast, the US inflation rate has dropped to 3.1%, leading to speculation that the Federal Reserve’s rate-hiking cycle is over. There’s currently a growing chance, over 40% per the futures market, that the Fed might start cutting rates as early as the second quarter of 2026. This difference in policy will be a key factor influencing the GBP/USD pair in the coming weeks. For those trading derivatives, this situation suggests positioning for a potential rebound in the Pound. Buying call options on GBP/USD with a strike price around 1.2500 for December 2025 could be a way to capture gains if the US Dollar weakens due to dovish Fed attitudes. A clear break above the 1.2550 resistance level could lead to a faster move toward 1.2600. We recall how sudden sentiment shifts, like the US-China trade news in 2019, can quickly impact currency markets. Current tensions in global supply chains pose similar risks, making it smart to use options not just for speculation, but also to protect against existing short-pound exposure. Simple put options can serve as an affordable way to guard against unexpected downturns. Create your live VT Markets account and start trading now.

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