Insights 
VT 
The Pound Sterling (GBP) recovered 0.60% against the US Dollar (USD) on Wednesday during the North American session, trading at 1.3396 after reaching daily lows of 1.3309. The recovery continued into the European session as the GBP/USD pair neared 1.3370, due to comments from US and Federal Reserve officials addressing labour market issues.
Asian Market Activity
During the Asian hours, the GBP/USD maintained its upward momentum (around 1.3350), driven by the US Dollar decline amid expectations of Federal Reserve rate cuts in 2025. CME FedWatch Tool data shows a 94% likelihood of a rate cut in October and a 93% chance in December.
Australia’s upcoming September employment report, expected to show 17,000 new jobs and a 4.3% unemployment rate, is anticipated to be uneventful due to a trend of tepid outcomes. Meanwhile, Lido DAO reclaimed support above $1.00, with its Lido V3 testnet going live for main protocol upgrades.
In forex trading, GBP/USD briefly touched the 200-day Exponential Moving Average near 1.3290 but pushed past 1.3400. Gold remained resilient at around $4,200 per troy ounce, sustained by geopolitical tensions, US-China trade worries, and concerns over a US government shutdown.
Given the high probability of the Federal Reserve cutting rates, we should view the current strength in GBP/USD as a trend that could continue in the coming weeks. The pair’s bounce from the 200-day moving average near 1.3290 to almost 1.3400 is a technically strong signal. This follows last week’s US jobless claims data, which unexpectedly jumped to 310,000, reinforcing the market’s belief that the Fed must act to support a weakening labor market.
Market Strategies
The US Dollar is likely to remain on the defensive, making derivative strategies that bet against it attractive. With the CME FedWatch tool showing a 94% chance of a rate cut this month, selling USD call options or buying GBP call options offers a way to capitalize on this overwhelming market expectation. However, we must be cautious, as any surprise hawkish statement from the Fed could cause a violent reversal.
The broader market anxiety is clearly visible with gold holding steady at an elevated $4,200 per ounce. We remember when gold first broke the $2,100 resistance level back in late 2023, and its doubling since then shows a persistent flight to safety amid geopolitical tensions and domestic fiscal concerns. Consequently, buying call options on gold or gold-related ETFs seems like a prudent strategy to hedge against continued uncertainty.
We should also monitor global economic data, like the upcoming Australian employment report, for signs of wider weakness. Another tepid jobs number out of Australia, which is expected, could present an opportunity to buy put options on the Australian dollar. This trade would align with the theme of a global slowdown that is forcing the Federal Reserve’s hand.
