GBP fell about 0.10% on Friday as the US dollar gained support after a higher-than-expected US Producer Price Index report. Markets priced in a less dovish Federal Reserve stance.<\/p>\n
Rising risks in the Middle East also weighed on GBP\/USD. The pair was trading at 1.3469 at the time of writing.<\/p>\n
The surprisingly hot US Producer Price Index reinforces the view that the Federal Reserve will be in no hurry to cut interest rates. This growing policy divergence, when compared with a Bank of England facing a weaker economy, will likely continue to put downward pressure on the GBP\/USD pair. We feel traders should consider positioning for further US Dollar strength against the Pound Sterling in the near term.<\/p>\n
This latest inflation signal comes after the January Consumer Price Index, which from our current perspective showed annual inflation holding stubbornly at 3.1%, well above the Fed’s target. Fed funds futures markets are now pricing in less than a 40% chance of a rate cut by the middle of the year, a sharp reversal from what was expected late last year. This repricing should continue to attract capital to the dollar, weighing on pairs like GBP\/USD.<\/p>\n
The rising risks in the Middle East are creating a flight-to-safety environment that almost always benefits the US dollar. We saw a similar dynamic during the flare-ups in late 2025, where the CBOE Volatility Index (VIX) briefly pushed above the 20 level, and the dollar strengthened across the board. Traders should consider buying put options on GBP\/USD as a way to profit from a decline while also hedging their portfolios against wider market instability.<\/p>\n
With the GBP\/USD exchange rate failing to hold above the key 1.3500 level, we see a strong technical resistance forming. A break below the immediate support at 1.3450 could open the door for a slide towards the 1.3300 area over the next few weeks.<\/p>\n
Therefore, a strategy of buying at-the-money put options with expirations in late March or April could be an effective way to position for this expected move.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP slips 0.10% as strong US PPI boosts dollar, less-dovish Fed bets; Middle East risks pressure GBP\/USD.<\/p>\n","protected":false},"author":103,"featured_media":17033,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50447","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\/50447","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\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50447"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50447\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17033"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}