Insights 
VT 
Technical Analysis
Technically, the Pound is forming a Head and Shoulder pattern against the US Dollar, trading around 1.3370. The 14-day RSI is near 40.00, with potential for a bearish shift if it dips lower. Key supports include the August 1 low of 1.3140, with resistance at the psychological level of 1.3500. The UK GDP, an indicator of economic activity, will be released, with consensus predicting a 0.1% monthly rise.
As of today, October 15, 2025, we are seeing Pound Sterling gain against the US Dollar because the Federal Reserve is signaling it will cut interest rates aggressively. Fed Chair Powell is worried about a weak US labor market, and traders are now pricing in a 94.6% chance of a 50-basis-point cut before the year ends. Last week’s US Core CPI print of 3.9% year-over-year also gave the Fed more room to consider cuts.
However, the pound’s strength is built on shaky ground, as the Bank of England is also expected to cut rates. Recent UK data showed unemployment rising to 4.8% and wage growth slowing to 4.7%, its lowest level since mid-2022. This slowdown from the over 6% wage growth we saw earlier in 2025 signals a rapid cooling that supports BoE rate cuts.
Market Outlook
This situation creates a puzzle for traders, as both central banks are looking to ease policy. The key is to determine which one will act more decisively, with all eyes on the UK’s monthly GDP data due tomorrow. A weak print below the 0.1% consensus, which is possible given recent PMI surveys hovering just around the 50 mark, could immediately halt the pound’s rally.
We must also be aware that the current rally is moving against a bearish technical pattern known as a “Head and Shoulders” on the daily chart. This setup warns that the upward move may be temporary and could reverse sharply, similar to a pattern we saw in late 2023 which preceded a notable drop. The IMF’s warning that UK inflation will remain high further complicates the BoE’s ability to cut rates as deeply as markets hope.
Given these conflicting signals, derivative traders should consider using options to manage risk. Buying GBP/USD put options would allow a trader to bet on a downturn while limiting potential losses if the current rally unexpectedly continues. This strategy is especially relevant if the pair approaches the psychological resistance level of 1.3500, which could serve as a ceiling for the current move.
