GBP\/USD has climbed above 1.3500 as the US Dollar weakens prior to the release of the ISM Services PMI. During the Asian hours on Wednesday, the pair traded around 1.3510, continuing to gain from the previous session’s modest uptick.<\/p>\n
Fed Governor Stephen Miran has suggested aggressive interest rate cuts to support the US economy, while President Neel Kashkari mentioned potential unemployment increases. Richmond Fed President Tom Barkin emphasised the need for careful interest rate adjustments in response to economic data.<\/p>\n
Amidst the geopolitical tension due to US actions in Venezuela, the Pound Sterling has shown resilience. On Tuesday, S&P Global reported that the UK Composite PMI rose to 51.4 in December 2025, though revised lower from the initial 52.1, marking an eighth consecutive month of growth in British private-sector activity.<\/p>\n
The Pound Sterling, the world’s oldest currency, is extensively traded, making up 12% of foreign exchange transactions globally. The Bank of England’s monetary policy decisions, particularly on interest rates, are a primary influence on its value.<\/p>\n
Key economic indicators like GDP, PMIs, and the Trade Balance are crucial for the Pound’s trajectory, as they reflect the economy’s health and can influence currency demand.<\/p>\n
Looking back at late 2025, we saw the US Dollar begin to weaken significantly on dovish signals from the Federal Reserve. Key officials hinted at aggressive rate cuts, a narrative that has since gained momentum. This has created a favorable backdrop for GBP\/USD, which pushed above the 1.3500 level.<\/p>\n
The subsequent US economic data confirmed this weakness, as the ISM Services PMI for December 2025 fell to 50.8, missing expectations. Job openings also declined, further solidifying the case for the Fed to start easing its policy. We are now seeing the CME FedWatch Tool pricing in over a 90% chance of a rate cut this month.<\/p>\n
Meanwhile, the Bank of England faces a different situation with UK inflation remaining persistent, last reported at 2.4% for December 2025. This divergence in monetary policy, with the Fed poised to cut while the BoE may hold, strengthens the case for the Pound. Historically, such policy differences, like the one seen in 2014-2015, have often led to sustained trends in the GBP\/USD pair.<\/p>\n
For the coming weeks, we should consider strategies that benefit from further GBP\/USD upside and rising volatility. Buying call options could be an effective way to gain exposure while limiting downside risk. We are now closely watching the 1.3650 level as the next major area of resistance.<\/p>\n
Despite the bullish outlook, we must remain mindful of underlying risks that were flagged late last year, such as geopolitical tensions. The UK’s own economic data, particularly the upcoming Q4 2025 GDP figures, could also introduce volatility. Any surprise strength in US data could quickly reverse the dollar’s recent slide.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD rises past 1.3500 as US Dollar weakens; UK PMI shows continued private-sector growth.<\/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-38463","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\/38463","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=38463"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38463\/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=38463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=38463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=38463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}