GBP/USD rose by over 0.23% after the US Supreme Court ruled against President Donald Trump’s tariffs set under a law for national emergencies. The pair traded at 1.3494 at the time of writing.
The US Dollar weakened after the ruling. A US Gross Domestic Product report also came in softer than expected, adding pressure to the Dollar.
Dollar Weakness And Sterling Tailwinds
The recent US Supreme Court decision and soft economic data are creating a clear downward pressure on the dollar. This presents an opportunity in the GBP/USD pair, which is breaking out to the upside. We see this as a fundamental shift, not just a temporary reaction.
The latest Gross Domestic Product report for the fourth quarter of 2025 confirmed this weakness, coming in at an annualized 1.4%, well below the 2.0% that was expected. This poor showing increases the likelihood that the Federal Reserve will consider an earlier-than-expected interest rate cut this year. This contrasts with the situation we saw for most of 2025, when stronger data supported the dollar.
Meanwhile, the UK’s economic picture is proving more resilient, with inflation data from last month remaining sticky at 3.8%. This forces the Bank of England to maintain a more hawkish stance compared to the Fed. The diverging monetary policy expectations should continue to favor the pound over the dollar.
Given this outlook, we should look at buying GBP/USD call options with expirations in late March and April 2026. Strike prices around 1.3550 and 1.3600 seem attractive to capture further upside momentum. This strategy allows us to profit from the expected rise while clearly defining our maximum risk.
Options Strategy And Technical Backdrop
This move above 1.3450 is technically significant, as the pair struggled to overcome this level several times in late 2025. Volatility has also picked up, with the 1-month implied volatility for the pair rising to 9.8%, its highest level this year. This indicates the market is bracing for larger price swings, which our options strategy is designed to capture.
