Insights 
VT 
The British Pound (GBP) has seen a rise against the US Dollar (USD), ending a two-day decline. Currently, GBP/USD is around 1.3393 after recovering from a seven-week low of 1.3324.
The pound is cautious at 1.3330 against the dollar amid US PCE data release expectations. The GBP/USD faces downward pressure before the US Personal Consumption Expenditure (PCE) data revelation.
Asian Markets Update
In Asian markets, GBP/USD stabilises around 1.3350, with UK inflation risks potentially limiting pound losses. UK inflation concerns and an unclear Bank of England policy stance may support the pound.
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EUR/USD sees gains and approaches the 1.1700 level as the US Dollar weakens. Gold is also rising towards $3,800 as the dollar experiences pressure and Fed rate cut bets increase. The US core PCE inflation data for August is expected to remain steady.
Market Trends And Predictions
We see the GBP/USD pair is trading much stronger now, hovering around 1.3850. This is a noticeable shift from the 1.33-1.34 range that was causing concern a few years back. The underlying theme remains a softer US dollar, which has been a consistent trend.
Yesterday’s US economic data continues to support this view on the dollar. The August 2025 Core PCE inflation report came in at 2.9% year-over-year, missing the market consensus forecast of 3.1%. This gives the Federal Reserve more justification to remain patient and hold interest rates steady.
The situation in the United Kingdom, however, is quite different. The most recent UK inflation data for August 2025 showed the Consumer Price Index (CPI) at 3.5%, still stubbornly high and well above the Bank of England’s 2% target. This puts immense pressure on the BoE to consider another rate hike, creating a clear policy divergence with the Fed.
For derivative traders, this growing divergence suggests that volatility in GBP/USD will likely increase as we approach the next Bank of England meeting in October. We believe positioning for further pound strength using call options could be a prudent strategy, as markets are now pricing in a 70% chance of another UK rate hike. Looking back, the broad weakness in the dollar that began in late 2024 has really set the stage for the current market environment.
This dynamic also helps explain why other assets have performed so strongly against the dollar. We see gold, for instance, continuing to flirt with the $3,850 level. A less aggressive Federal Reserve reduces the appeal of holding dollars, pushing capital into other currencies and commodities.
