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The GBP/USD pair falls by more than 0.21% as of Thursday, following softer UK inflation data affecting expectations for a Bank of England rate cut by year’s end. Currently, the pair is trading at 1.3326, having previously peaked at 1.3359.
During Thursday’s European session, the Pound Sterling drops to about 1.3340 against the US Dollar. The decline is partly attributed to a Bank of England Monetary Policy Committee member’s comments suggesting US tariffs might decrease UK price levels.
Currency Forecasts And Analyses
The GBP/USD has been dipping for the fifth straight day, hovering around 1.3340 during Thursday’s Asian trading hours. The US Dollar strengthens amidst increased risk aversion, with traders cautiously awaiting US inflation data set for release on Friday amid ongoing government shutdown concerns.
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The Pound Sterling is under pressure, with GBP/USD falling for a fifth straight day as we watch the 1.3320 level. We are seeing this weakness because the latest UK inflation figures for September 2025 came in softer than expected, fueling bets on a Bank of England rate cut. Money markets are now pricing in an over 75% chance of a 25 basis point cut by the first quarter of 2026, a significant dovish shift.
At the same time, the US Dollar remains firm due to a more cautious market sentiment, especially with the ongoing government data blackout creating uncertainty. In contrast to the UK’s situation, the latest US inflation data from September 2025 showed core CPI remaining stubbornly above the Fed’s target at 3.7%. This divergence in inflation and central bank outlook is the primary driver for a weaker GBP/USD.
Opportunities In Derivatives Trading
For derivatives traders, this environment suggests positioning for further Sterling weakness against the dollar in the coming weeks. We see opportunities in buying GBP/USD put options with strike prices around 1.3250 or 1.3200, providing a clear way to capitalize on the downward momentum. The heightened uncertainty over the Bank of England’s next move should also support implied volatility, making option strategies more attractive than outright shorting for some.
This sentiment marks a significant change from the aggressive rate-hiking cycle we saw the Bank of England pursue through 2022 and 2023. Back then, the focus was entirely on combating multi-decade high inflation. Now, the conversation has completely shifted to managing a potential economic slowdown, which justifies a bearish stance on the pound.
