Pound Sterling rose to 1.3440 after the Bank of England made a recent decision. They reduced the policy rate by 25 basis points, bringing it down to 4%. The Monetary Policy Committee had an unusual split on their decision. Four members wanted to keep the rates the same, four wanted a 25 basis point cut, and one preferred a 50 basis point cut. Bank officials are worried about inflation driven by rising food prices. Deputy Governor Ramsden noted that inflation is lasting longer than expected, while Governor Bailey showed uncertainty about future rate cuts. Currently, the market sees only a 70% chance of a 25 basis point cut happening by the end of 2025. Daily market activity shows some mild positive trends with moderate increases in the Relative Strength Index (RSI). Expect GBP/USD to stabilize between 1.33 and 1.35. Resistance is at 1.35, while support levels are 1.34 and 1.3360. The economic situation remains cautious due to external factors, including concerns over US tariffs impacting market conditions. The US Dollar’s recent rebound is also affecting trading, making it harder for GBP/USD to climb. After the Bank of England’s decision, we see the Pound’s rise as a reaction to uncertainty rather than strength. The market anticipated clearer guidance on future rate cuts, but the split vote has created confusion. This suggests we prepare for a period of unstable, range-bound trading instead of a clear upward trend. The divided vote in the Monetary Policy Committee is notably significant. A 4-4-1 result is rare, highlighting deep disagreements on handling inflation and making future policy changes uncertain. Such unpredictability often leads to increased volatility, which raises the costs of holding options but may increase profits if a breakout occurs. Looking at the facts, the Bank’s worries about food prices are valid. While headline inflation reached the 2% target in mid-2024, July 2025 figures show stubborn food inflation at 3.4%. This ongoing pressure supports those committee members who opposed a deeper rate cut. In the upcoming weeks, selling options could be a smart strategy. With GBP/USD likely staying between 1.33 and 1.35, we can profit from options that expire worthless if the currency pair remains within this range. This strategy bets on stability in a market that is currently uncertain. Monitoring technical levels is crucial for short-term trades. We will watch the 1.35 level as a key resistance point to open short positions or sell call options. Meanwhile, the support area between 1.3360 and 1.34 appears strong for buying dips or selling put options. We must also consider the pressure from the United States. The dollar is strengthening, boosted by a strong US jobs report that added over 240,000 jobs last week. This reinforces the Federal Reserve’s cautious approach to its own rates. Additionally, new discussions in Washington about possible tariffs on European goods will likely limit significant gains for the Pound above the 1.35 level.

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