GBP\/USD fell 0.25% to near 1.3500 in the European session on Wednesday. The move came as the US Dollar stayed firm, with the US Dollar Index (DXY) up 0.2% to about 98.50.<\/p>\n
CME FedWatch odds for at least one Federal Reserve rate rise this year rose to 35.6% from 23.5% before the US CPI release. US headline CPI was 3.8% year-on-year, above the 3.7% forecast and the prior 3.3% reading.<\/p>\n
In the UK, attention is on Q1 GDP data due on Thursday. Forecasts point to 0.6% growth, compared with 0.1% in the last quarter of 2025.<\/p>\n
Technically, GBP\/USD traded below the 20-day EMA at 1.3530 and failed near the 61.8% Fibonacci level at 1.3602. The RSI was 49.6, close to the neutral level.<\/p>\n
Resistance is seen near 1.3518, 1.3530, 1.3602, then 1.3721 and 1.3873. Support sits near 1.3434, then 1.3331 and 1.3163.<\/p>\n
The US dollar is strong right now because of that higher-than-expected inflation report. The 3.8% CPI figure has pushed the odds of a Fed rate hike this year to over 35%, according to the CME FedWatch tool. This is putting clear pressure on the GBP\/USD pair, pushing it below key technical levels.<\/p>\n
However, we have just seen the UK’s Q1 GDP figures, which confirmed a strong 0.6% expansion for the start of the year. This is a significant improvement from the sluggish 0.1% growth we saw in the final quarter of 2025. This positive UK data creates a pull against the dollar’s strength, setting up a potential conflict for the currency pair.<\/p>\n
Given the pair is trading below the 1.3530 moving average, a cautious approach is warranted in the immediate term. Traders looking to ride this downward momentum could consider buying put options with a strike price around the 1.3434 support level. This strategy offers a defined risk if the pound suddenly strengthens on the back of the positive economic news.<\/p>\n
The conflicting signals between strong US inflation and robust UK growth suggest volatility is on the horizon. A straddle options strategy could be effective, allowing a position to profit from a large price move in either direction as the market digests this week’s opposing data points. We all remember how similar central bank divergences created sharp swings back in 2023.<\/p>\n
If the positive UK economic data begins to outweigh the Fed’s hawkish stance, we will be watching for a decisive break back above 1.3530. A sustained move over this level could signal a reversal, making call options with a target near the 1.3602 resistance an attractive play. The Relative Strength Index hovering near 50 suggests there is room for momentum to build in either direction.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD slid near 1.3500 as firm dollar, hotter US CPI and Fed hike odds weighed; UK GDP awaited.<\/p>\n","protected":false},"author":103,"featured_media":17030,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[58],"class_list":["post-52190","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-pound"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52190","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=52190"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52190\/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=52190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=52190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=52190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}