The Pound Sterling (GBP) faced selling pressure on Thursday after the Bank of England (BoE) decided to keep interest rates steady at 4%. The support from the Monetary Policy Committee (MPC) for maintaining this rate was less than expected, affecting the currency’s strength compared to others. Still, the GBP/USD pair showed some upward movement, trading around 1.3060 during Thursday’s Asian session. This happened before the BoE’s anticipated policy announcement, with growing speculation that lower inflation and wage data might lead to future rate cuts.

Currency Rebound and Market Movements

The GBP/USD pair eventually rose to new daily highs near 1.3140 by the end of the North American session. This rebound came as the US Dollar weakened and the BoE took a supportive stance. The Pound’s better performance coincided with broader market trends, such as Ethereum dropping below $3,300 and Solana maintaining its price around $160. Additionally, there were significant shifts in other financial markets. The Dow Jones Industrial Average fell by 380 points, while Gold approached $4,000 per troy ounce. With the Bank of England’s cautious approach noted for November 6, 2025, traders might consider buying GBP/USD put options that expire after the December meeting. Recent data showed UK inflation dropped to 3.9% in October, and market speculation indicates a greater than 60% chance of a rate cut next month. A similar market condition occurred in late 2023 when central bank changes led to notable currency shifts, providing a possible framework for this trade.

Trading Strategies and Market Predictions

However, weak US jobs data is also prompting speculation for a Federal Reserve rate cut, which could weaken the dollar and complicate a straightforward short position on the pound. Thus, employing a long straddle strategy—buying both a call and a put option—might effectively take advantage of large price swings in either direction. The one-month implied volatility for GBP/USD has jumped to 8.5%, the highest in three months, indicating that the market is preparing for a significant movement. For those expecting continued stalemate between the two central banks, the pound’s struggle to break above the key 1.3100 level is significant. This technical resistance has been tested repeatedly over the past month, suggesting the pair could remain within a range. Consequently, selling options premium through a strategy like an iron condor might be a wise way to benefit from sideways price movement. Create your live VT Markets account and start trading now.

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