GBP/USD rose 0.31% on Monday to 1.3507, after bouncing from 1.3475. The US Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) national emergency. The court said tariffs set under a national emergency are illegal, and that Congress—not the president—has the power to impose taxes and tariffs. Donald Trump then said he would introduce 10% global tariffs. He later lifted them to 15% under Section 122 for 150 days, with any extensions requiring Congress’ approval.

Volatility Driven By Policy Conflict

US Trade Representative Jamieson Greer said existing trade deals will stay in place. US Factory Orders fell 0.7% month on month in December, after a 2.7% rise in November. The decline was linked to weaker commercial aircraft bookings. Fed Governor Christopher Waller said he would support more easing if January Nonfarm Payrolls are revised lower. Otherwise, he prefers holding rates if the trend continues in February. In the UK, markets expect a 25 basis point Bank of England rate cut on 19 March. UK unemployment rose after a weaker jobs report, while inflation fell to its lowest level since March 2025. On the chart, GBP/USD is trading near 1.3505, with resistance around 1.3532. The broader uptrend is supported by a rising trend line from 1.3035. GBP/USD is being pulled in different directions by forces on both sides of the Atlantic. The Supreme Court ruling against emergency tariffs has weighed on the dollar. However, the quick move to announce new 15% tariffs keeps trade policy uncertainty very high. This backdrop suggests volatility may remain the main theme in the weeks ahead.

Options Strategies For A Range Break

In the US, the growth picture is cooling, which supports the case for a weaker dollar. The weak factory orders reading from December 2025 was an early warning. More recent data points in the same direction, with the preliminary February 2026 Manufacturing PMI slipping to 49.8, which signals a mild contraction. Attention now turns to the February Nonfarm Payrolls report in early March, which could give the Fed the evidence it needs to consider easing. At the same time, the case for a weaker pound is also growing, setting up a classic tug-of-war. After last week’s soft jobs and inflation reports, expectations for a Bank of England cut have strengthened. Overnight index swaps now imply an 85% chance of a 25-basis-point cut at the 19 March meeting, up from about 50% at the start of the month. This split—between a Fed that is highly data-dependent and a BoE that is turning more dovish—makes trading conditions harder to predict. Political headlines around Prime Minister Starmer add another risk factor for sterling. When central bank paths diverge this clearly, it can lead to a lasting trend, but the uncertainty around US trade policy is a major wildcard. For derivatives traders, this setup can make “buying volatility” appealing. With key US data and a BoE decision ahead, a one-month GBP/USD straddle could benefit from a large move in either direction. The trade aims to capture a breakout from the current range without needing to predict whether US tariffs or UK rates will be the bigger driver. For traders with a clear directional view, options can also help control risk. If you think US uncertainty will dominate, call options can express a bullish GBP/USD view. If you think the BoE will move decisively, put options can position for a drop—potentially even below the 1.3035 trend line highlighted in the technical view. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now