The Pound Sterling is gaining ground against major currencies following strong UK job market data for the three months ending in June. The Office for National Statistics reported that 239,000 jobs were created in the second quarter, up from 134,000 in the previous quarter. On Monday, GBP/USD dipped slightly, ending a six-day winning streak, but it regained strength in the European session on Tuesday, trading above 1.3450. Attention is now on US inflation data and geopolitical factors, such as the US and China’s 90-day trade truce, which have been influencing the US Dollar and causing fluctuations in GBP/USD. Different currencies are performing at varying levels, with EUR/USD approaching two-week highs of 1.1700, thanks to the weakness of the US Dollar. GBP/USD is climbing to near three-week highs of 1.3530, as pressure continues on the US Dollar ahead of upcoming CPI data releases. Other markets are reacting to currency changes as well. Gold prices have bounced back to $3,350 per troy ounce after hitting earlier lows due to the US Dollar’s trends. The Pi Network has seen a pullback, dropping below $0.4000, suggesting possible bearish moves in the crypto market. Meanwhile, the Bank of England recently cut rates by 25 basis points to 4%, indicating caution regarding future inflation management. With the strong UK jobs report, we can expect continued support for the Pound Sterling in the near term. The GBP/USD exchange rate is trading close to three-week highs around 1.3530, marking a significant recovery compared to 2022 and 2023 levels. We should think about buying call options to take advantage of this upward trend in the next week or so. The main risk ahead is the US inflation data that is due soon. A lower CPI reading could weaken the US Dollar further, pushing GBP/USD and EUR/USD higher. Recent data from July 2025 showed US inflation at 2.9%, which was below what analysts expected and has already contributed to the dollar’s decline. However, we need to be wary of the Bank of England’s recent policy decision. The cut to 4% despite strong employment data indicates concerns about future economic growth. This marks a shift from the aggressive stance they took during 2024 to tackle inflation. This mix of positive current data and the anxiety of the central bank could lead to high market volatility. Therefore, it might be wise to consider buying straddles or strangles on GBP/USD. These positions can be profitable if the currency pair moves significantly in either direction after the US data release. Looking at other markets, the weak dollar supports gold prices, driving them toward $3,350 an ounce. This price reflects ongoing geopolitical tensions and persistent inflation worries that we’ve seen over the past eighteen months. We can leverage this trend by taking long positions in gold futures. In contrast, the crypto market shows signs of potential pullback, especially with weakness in assets like the Pi Network. Following the significant price swings in Bitcoin and Ethereum in the first half of 2025, being cautious seems prudent. We might consider reducing our exposure or buying put options as a hedge against a broader market correction.

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