GBP\/USD rose as the Bank of England cut rates by 25 basis points in a close 5\u20134 vote, with indications of hawkish sentiment. The pair traded at 1.3410, up 0.28%, boosted by a softer US Consumer Price Index, which decreased to 2.7% year on year in November.<\/p>\n
The US core inflation fell to 2.6% from 3%, reflecting moderated price pressures. Initial Jobless Claims for the week ending December 13 decreased to 224K, surpassing expectations of 225K. Despite these economic indicators, expectations for a 2026 Federal Reserve rate cut remained largely unchanged at 62 basis points.<\/p>\n
The BoE’s rate cut from 4% to 3.75% propelled GBP\/USD higher. The minutes from the BoE meeting indicated uncertainty about future interest rates, citing inflation persistence data that showed both positive signs and potential risks.<\/p>\n
Looking ahead, US economic data on Personal Consumption Expenditures Price Index and Michigan Consumer Sentiment will be significant. In the UK, traders will monitor November’s Retail Sales for a possible increase from 0.2% to 0.9% year on year.<\/p>\n
GBP\/USD technical analysis reveals bullish momentum is waning, with possible support at 1.3361 and resistance at 1.3460. A close below 1.3400 could lead to testing lower prices, while a rally above 1.3460 could target the 1.3500 level.<\/p>\n
The Bank of England’s split-vote rate cut gives us a reason to be bullish on Sterling, as it signals reluctance to ease policy further. However, the soft US inflation numbers are questionable due to the recent 43-day government shutdown. This creates significant uncertainty heading into year-end trading.<\/p>\n
We must be cautious about this US CPI print, as the data collection was incomplete. Looking back, we saw similar data reliability issues during the 35-day shutdown in 2018-2019, which led to sharp market reactions later. All eyes should now be on the upcoming PCE inflation data to either confirm or contradict this week’s soft reading.<\/p>\n
Given this level of doubt, implied volatility on GBP\/USD options seems unusually low, especially compared to the spikes above 20% we saw during the UK’s 2022 fiscal crisis. This suggests buying volatility through strategies like straddles could be prudent. Such positions would profit from a large price swing in either direction once the true inflation picture becomes clearer.<\/p>\n
For those leaning bullish on the pound, the failure to break the 1.3455 resistance level is a major warning sign. Instead of buying calls outright, a bull call spread would allow for upside participation while limiting the cost. This is a more capital-efficient way to express a view that the pair will grind higher but may not break out explosively.<\/p>\n
On the other hand, the fading momentum on the RSI and strong US jobless claims provide a case for a pullback. A drop below the 1.3400 level would target the key moving averages near 1.3350. A bear put spread is a defined-risk way to position for this potential short-term weakness in the cable.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD climbs after BoE rate cut; softer US inflation and strong data shape monetary policy outlook.<\/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-37251","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\/37251","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=37251"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37251\/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=37251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}