GBP\/USD is maintaining a position above 1.3450, experiencing over 1% growth in the previous week. The technical outlook reveals potential overbought conditions in the near term.<\/p>\n
The second half of the previous week saw bullish momentum for GBP\/USD as the Pound Sterling benefited from a hawkish rate cut by the Bank of England. BoE Chief Economist Huw Pill warned of the risk of spill-over into persistent inflation.<\/p>\n
Pound Sterling regained against the US Dollar, pushing GBP\/USD from three-month lows to nearly 1.3500, a ten-day high. This recovery was attributed to last week’s favourable performance, the best since late June.<\/p>\n
The Double-booster was aided by disappointing July US labour data and a slowdown in the services sector. Concerns over US economic prospects have increased expectations of the Fed lowering interest rates in September.<\/p>\n
We are currently seeing GBP\/USD hold firm above 1.3450 after a strong rally last week. The pair looks technically overbought, suggesting a short-term pullback could be on the horizon. This requires us to be cautious about chasing the current upward momentum too aggressively.<\/p>\n
The pound’s strength comes from the Bank of England’s recent hawkish stance, even as they cut rates. With the latest UK CPI data for July 2025 coming in at a stubborn 4.1%, the market believes the BoE will be slow to cut rates further. This fundamental support for Sterling is a key factor for our positioning.<\/p>\n
On the other side of the pair, the US dollar is weakening on concerns of an economic slowdown. The recent July Non-Farm Payrolls report showing a disappointing gain of only 165,000 jobs and the ISM Services PMI dipping to 51.2 have fueled these fears. As a result, the CME FedWatch Tool now shows traders are pricing in an 85% probability of a Fed rate cut in September.<\/p>\n
Given this divergence, we see an opportunity in options strategies that benefit from continued upside but with defined risk. Buying call options on GBP\/USD could capture further gains if the trend continues toward the 1.3600 level. However, to hedge against the overbought signal, using a bull call spread would be a more prudent approach, as it limits potential losses if the pair reverses.<\/p>\n
We should also anticipate a rise in volatility as the September central bank meetings approach. Looking back at the central bank policy divergence in 2022, we saw sharp, unpredictable swings in currency pairs. This suggests that strategies like long straddles, which profit from large price moves in either direction, could become attractive if the market becomes more uncertain.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD rises over 1%, nearing 1.3500 amid BoE hawkishness and weak US economic indicators.<\/p>\n","protected":false},"author":62,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28779","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\/28779","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=28779"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28779\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17032"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}