Insights 
VT 
GBP/USD has stabilised as the US Dollar reduces its previous gains, trading at 1.3425, up by 0.08%. The US Dollar Index (DXY) stands at 98.82, despite having highs of 98.98, while traders anticipate clues from the Federal Reserve’s minutes.
The US government shutdown has entered its eighth day without an end in sight. With minimal economic data, traders rely on the remarks of Federal Reserve officials for guidance.
Economic Outlook In The UK
In the UK, growth is expected to be modest with inflation around 4%. The fiscal budget is set for release on 26 November and may include tax hikes to maintain fiscal rules.
BoE Chief Economist, Huw Pill, emphasises the importance of focusing on price stability to control inflation. Technical analysis suggests GBP/USD may remain below 1.3500 with resistance levels needing to be surpassed to reach 1.3726.
Sterling is the official currency of the UK and a major global trading unit. Its value is influenced by the Bank of England’s monetary policy, especially interest rates, which are adjusted to maintain a steady inflation rate.
Economic data such as GDP and trade balance also affect the Pound’s value. A positive trade balance strengthens the currency.
Current Market Conditions
As of today, October 8th, 2025, the focus for us is on the upcoming Federal Reserve minutes and the continued political gridlock in the United States. The ongoing US government shutdown, now in its eighth day, creates headwinds for the dollar, with recent estimates suggesting it costs the US economy over $200 million per day in lost output. This political uncertainty could limit the US Dollar’s upside and keep GBP/USD supported above the 1.3400 handle for now.
On the UK side of the equation, the latest inflation figures for September 2025 just came in at a persistent 3.9%, which is still nearly double the Bank of England’s target. This data validates the recent strong warnings from BoE officials that they must remain committed to price stability. Because of this, we’ve seen market expectations for any BoE interest rate cuts pushed back well into mid-2026, providing a solid floor for the Pound.
For derivative traders, this environment of conflicting central bank priorities suggests an increase in volatility is likely. The clash between a hawkish Fed and a resolute BoE makes sharp, two-way price action probable in the coming weeks. This points toward using options strategies, such as buying straddles, to capitalize on a significant breakout from the current range rather than betting on a specific direction.
Looking back at the sharp sell-offs during the market turmoil of 2022, we know how quickly sentiment can shift, making risk management essential. We see the 1.3500 level as a critical resistance area, a cap that has held since the summer months. A sustained break below the 1.3324 swing low would be a bearish signal, potentially triggering a much faster move down toward the 200-day moving average near 1.3160.
