The GBP\/USD exchange rate increased following a 25 basis point rate cut by the Bank of England. The decision showed a divided committee, with a 5-4 vote, rather than the expected 7-2 split. <\/p>\n
The process required a second voting round; initially, opinions varied significantly within the committee. Governor Andrew Bailey noted ongoing risks with inflation and growth but maintained uncertainty over the future rate path. <\/p>\n
Bailey pointed to slower pay growth and delayed business investments, while Deputy Governor Ramsden mentioned surprises in UK inflation akin to supply-side constraints. Recession fears were downplayed, with Bailey attributing updated GDP predictions to new data rather than a shift in economic perspective. <\/p>\n
In technical terms, GBP\/USD broke above the July\u2013August 38.2% retracement level and surpassed its 100-day moving average. As former resistance levels between 1.33607 and 1.3378 turned to support, the pair registered a bullish reversal. <\/p>\n
Continued bullish momentum aims for a target at the July\u2013August 50% midpoint at 1.3463. Despite previous declines below June\u2019s 100-day average, the broader trend remains upward since January. Recent movements have reinforced the buyers’ grasp on the market, solidifying their control.<\/p>\n
The surprise 5-4 vote on today’s rate cut suggests the Bank of England is not eager to ease policy further. This has shifted the immediate outlook, making bullish strategies on GBP\/USD more attractive. We see the old resistance around 1.3378 now acting as a solid floor for any pullbacks.<\/p>\n
This view is strengthened by the latest UK inflation data from July 2025, which came in at a sticky 3.1%, justifying the MPC’s cautious stance. Adding to this, last week’s US jobs report showed a weaker-than-expected 160,000 new jobs, putting pressure on the dollar side of the pair. This combination of a hesitant BoE and a softer US economy creates a favorable environment for the pound.<\/p>\n
For the coming weeks, we are looking at buying call options to capitalize on this upward momentum. September 2025 call options with a strike price around 1.3500 offer a good balance of risk and reward, targeting the next resistance zone near 1.3463. This strategy allows us to profit from a rise in GBP\/USD while limiting our potential loss to the premium paid.<\/p>\n
Given the increased uncertainty, implied volatility has ticked up, making options slightly more expensive. To manage this cost, traders could consider a bull call spread, for instance buying the September 1.3450 call and selling the 1.3550 call. This lowers the initial cash outlay but caps the potential profit.<\/p>\n
We’ve seen similar patterns before, like during the 2022-2023 period, where divided central bank decisions often led to short-term currency strength. The recent price action also validates the longer-term uptrend that started back in January 2025. The failure to break lower last month showed that underlying buying interest remains strong.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD rises as Bank of England cuts rates; bullish trend continues amid divided committee and inflation concerns.<\/p>\n","protected":false},"author":62,"featured_media":17030,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28506"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28506\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17030"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}