Insights 
VT 
In the US, October’s ADP Employment Change figures are set for release on Wednesday. These numbers often show poor correlation with official datasets but will still draw attention due to the US government shutdown’s impact on data release.
Pound Sterling And Its Influences
The Pound Sterling, the UK’s official currency, is a major player in the foreign exchange market. It ranks as the fourth most traded currency, making up 12% of global transactions, averaging $630 billion daily. Its value is largely influenced by the Bank of England’s monetary policy, which focuses on maintaining a 2% inflation rate.
Economic indicators such as GDP, PMIs, and employment figures can impact the Pound’s value. A strong economy attracts investment and may prompt interest rate hikes, boosting GBP. Conversely, weak data likely weakens the currency. The Trade Balance also plays a role, as a positive balance benefits the currency.
Given the sharp break below 1.3100, the immediate momentum for GBP/USD is clearly bearish. We are witnessing a third consecutive week of declines, and this trend suggests sellers are in control. Traders should view any short-term rallies as potential opportunities to initiate new short positions.
The Bank of England’s meeting this Thursday is the next major risk event, but we expect them to hold interest rates steady. With the latest inflation data from October 2025 coming in at a stubborn 3.5%, well above the 2% target, the BoE cannot justify a rate cut. This leaves the Pound without a key source of support from its central bank.
Implications For Traders
On the US side, yesterday’s ADP employment report showed a stronger-than-expected 215,000 jobs added, fueling further dollar strength. Since the ongoing US government shutdown is preventing the release of official Nonfarm Payrolls data, this ADP figure is carrying more weight than usual. This divergence in economic data reinforces the case for a weaker GBP/USD.
For derivative traders, this environment points towards strategies that profit from further downside or increased volatility. Buying GBP/USD put options offers a direct way to speculate on a continued fall toward the 1.2900 level. Those expecting a sharp move after the BoE announcement, regardless of direction, could consider long strangles to capitalize on a volatility spike.
We only need to look back at the 2022-2023 period to see how high inflation forces a central bank’s hand, but the context now is different. Unlike then, recent UK economic growth has been anemic, with Q3 2025 GDP expanding by a mere 0.1%. This stagnation prevents the BoE from raising rates to defend the currency, leaving it exposed.
The UK’s fundamental economic health also weighs on the Pound, as seen in recent trade balance figures. The data for September 2025 showed a widening trade deficit, meaning the country is spending more on imports than it earns from exports. This underlying weakness provides a steady, long-term headwind against any significant Sterling recovery.
