Insights 
VT 
Expectations of Further BoE Easing
The GBP’s underperformance is tied to expectations of further BoE easing, which weighs on the GBP/USD pair. Market participants price a 40% likelihood of a 25-basis-point rate cut by the BoE in November and expect 65 basis points of reductions by year-end. This sentiment is reinforced by stable inflation data and signs of a cooling UK jobs market.
Given the pound’s repeated failure to break the 1.3500 resistance level, we see this as a strong ceiling for the near future. This repeated rejection suggests traders could consider selling call options with strike prices at or above 1.3500. This strategy would allow for collecting premium based on the expectation that the pair will not rally past that point in the coming weeks.
The bearish case for Sterling is strengthened by expectations of a Bank of England rate cut. Recent data supports this, with the Office for National Statistics reporting on October 17, 2025, that UK wage growth slowed to its lowest level in a year, reinforcing the view that the jobs market is cooling. This makes buying put options with a strike price below the 1.3300 mark an interesting play to hedge against or profit from a further slide.
US Dollar Safe Haven Status
On the other side of the pair, the US dollar is gaining from its safe-haven status amid renewed trade friction between the US and key Asian economies. We saw a similar dynamic in the markets of early 2023, where global uncertainty drove the US Dollar Index significantly higher. This environment makes it risky to bet against the dollar, further justifying a bearish or neutral stance on GBP/USD.
With the next Bank of England policy meeting just weeks away in November, we can expect implied volatility in the options market to rise. The market is currently pricing in a 40% chance of a rate cut, creating uncertainty that will make options more expensive. Therefore, using debit or credit spreads could be a more capital-efficient way to express a directional view on the pound without paying excessively high premiums.
