The GBP\/USD weakens to around 1.3365 during early European trading on Thursday. This drop follows the US Federal Reserve’s decision to trim the key interest rate by a quarter-point, influencing the US Dollar (USD) to rebound.<\/p>\n
As the Fed delivered its third rate reduction of the year, it indicated a possible pause in the near future. Markets show a nearly 88% likelihood of the Bank of England (BoE) cutting its rate next week due to easing inflation pressures.<\/p>\n
The Fed’s chair emphasized the need for further evaluation of how the recent cuts affect the US economy. Updated economic projections hint at one more cut next year, contingent upon incoming data.<\/p>\n
The Pound Sterling, an old and widely traded currency, is influenced by BoE decisions, focusing on maintaining stable inflation around 2%. The value of GBP can be swayed by economic indicators like GDP, trade balance, and PMIs.<\/p>\n
A positive trade balance, where exports exceed imports, could bolster the currency. Conversely, weak economic indicators can prompt the BoE to lower rates, impacting GBP negatively.<\/p>\n
Given the current date of December 11, 2025, we are seeing the British Pound weaken against the US Dollar as the market anticipates a rate cut from the Bank of England (BoE) next week. The latest UK inflation data for November showed a drop to 2.1%, which is much closer to the BoE’s target and gives them justification to ease policy. This contrasts sharply with the situation we saw back in late 2019 when both central banks were in an easing cycle.<\/p>\n
The US Federal Reserve, on the other hand, held its interest rate steady in its meeting yesterday, citing still-elevated inflation which was last reported at 3.0% and a resilient labor market. This growing divergence in monetary policy between a dovish BoE and a more cautious Fed is putting clear downward pressure on the GBP\/USD pair. The US dollar is finding support from this interest rate differential, which traders expect to widen further.<\/p>\n
For us in the derivatives market, this setup suggests positioning for further declines in the pound over the coming weeks. Volatility is expected to pick up around the BoE’s announcement, so strategies like buying GBP\/USD put options could be an effective way to capitalize on a potential drop while managing risk. We should also watch the US weekly jobless claims data later today for any signs of weakness in the American economy, though the primary driver for this pair remains central bank policy.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD falls to 1.3365 as Fed rate cut boosts USD; BoE expected to cut rates soon.<\/p>\n","protected":false},"author":62,"featured_media":17037,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36598","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\/36598","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=36598"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36598\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17037"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}