The GBP/USD is currently at 1.3148, up a tiny 0.10%. This movement occurs amid few economic updates from the UK and the ongoing US government shutdown. Earlier, it reached a low of 1.3094. The Pound Sterling (GBP) has dropped against major currencies, except for the New Zealand Dollar (NZD). This follows the Bank of England’s decision to keep interest rates at 4%, which had a narrow vote of 5-4.

Exchange Rate Movement

During Asian trading hours on Friday, GBP/USD stays around 1.3120. The exchange rate is falling as the GBP weakens due to the Bank of England’s cautious position in November. The EUR/USD is trading near 1.1580, moving closer to 1.1600 because of a weaker US Dollar. This is prompted by a preliminary consumer sentiment reading that did not meet expectations. Gold prices hold steady near $4,000 per troy ounce, supported by a weaker US dollar and lower Treasury yields. Dogecoin is stable, trading above $0.1600 as the chance of a Bitwise ETF launch increases. Different brokers are being evaluated for trading in 2025. Assessments include brokers with low spreads, high leverage, and those serving regions like MENA and Latin America.

Market Strategies and Economic Outlook

The Bank of England’s recent 5-4 decision to keep rates indicates a clear softening signal, reflecting underlying weakness in the UK economy. This split vote implies that more members are considering rate cuts to boost demand, suggesting it may be wise to buy put options on GBP/USD. The pair is around 1.3150 partly due to US Dollar weakness, but the BoE’s position seems more permanent. The ongoing US government shutdown and shaky consumer sentiment are causing significant uncertainty in the market, leading equity indices to break important support levels. This situation favors long volatility strategies, such as buying call options on the CBOE Volatility Index (VIX). Historically, we’ve seen the VIX spike during political and economic turmoil, often providing strong returns. Let’s not forget the 35-day government shutdown from winter 2018-2019, the longest in US history, which reduced quarterly GDP growth by an estimated 0.2%. The current shutdown is raising similar concerns, impacting the US dollar and pushing investors toward safe assets. This historical context explains the market’s current cautious approach and the dollar’s decline. The BoE’s soft stance is a clear shift from the aggressive rate hikes we saw in 2022 to fight soaring inflation. With the UK Consumer Price Index (CPI) recently reported at 3.1%, the bank is now focusing on growth. This change supports strategies that foresee a weaker Pound Sterling in the weeks ahead. Gold’s rise above $4,000 per ounce has surpassed previous all-time highs from 2023, marking a significant move toward safe investments. This momentum is driven by US uncertainties and a weakening dollar. Traders should consider riding this trend by purchasing call options on gold futures or bull call spreads to take advantage of further increases. Create your live VT Markets account and start trading now.

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