The GBP\/USD pair is experiencing a lack of buyer interest, remaining stable above the 200-day Simple Moving Average at around 1.3360. The US Dollar is attempting to recover from a recent dip, creating resistance for GBP\/USD amidst a generally weaker equity market sentiment. However, the US Federal Reserve’s dovish stance is causing caution among USD buyers.<\/p>\n
The British Pound has seen a rise, crossing the 1.3400 barrier following three consecutive weeks of gains. This increase is largely due to a weakened US Dollar, influenced by a recent Federal Reserve interest rate cut. The upcoming period will focus on the British Pound, with upcoming significant UK data and a Bank of England policy meeting on December 18. UK bond markets are displaying indecision, with 10-year gilt yields remaining stable, not offering much direction for traders.<\/p>\n
We see the GBP\/USD pair is stalled around the 1.3360 level, holding just above the vital 200-day moving average which traders view as key support. The recent push toward 1.3400 was driven almost entirely by US dollar weakness rather than sterling strength. This suggests that without a new catalyst, the pair may struggle to advance further.<\/p>\n
The dollar’s softness is a direct result of the Federal Reserve’s rate cut last week, a move that seemed justified after US Core CPI for November 2025 dipped to 2.1%, reinforcing a dovish outlook. In contrast, the UK’s situation is more complex, as last week’s inflation data for November showed a surprise jump to 3.5%. This puts the Bank of England in a difficult position for its upcoming meeting.<\/p>\n
With the Bank of England’s policy decision arriving this Thursday, December 18, we have seen a noticeable increase in the implied volatility for GBP\/USD options. Given the uncertainty, traders should consider using derivatives to manage risk or speculate on a large price swing following the announcement. A strategy like buying an options straddle could be effective, as it profits from a significant move in either direction.<\/p>\n
If the Bank of England takes a hawkish tone to fight that 3.5% inflation, we could see a quick break above the 1.3400 resistance. Historically, when we look back at the inflationary pressures of 2022 and 2023, central banks that acted decisively saw their currencies strengthen. A dovish message, however, could easily break the current support and send the pair lower.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD holds above 200-day average; Pound rises past 1.3400 amid weak USD and Fed dovishness.<\/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-36830","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\/36830","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=36830"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36830\/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=36830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}