Insights 
VT 
The Impact Of The Fed’s Interest Rate Cut
During American trading, GBP/USD fell below the 200-day Exponential Moving Average, indicating a bearish trend. The GBP’s decline has been worsened by a general market shift towards safer assets like the Dollar as a result of risk aversion.
Powell’s cautious statements hint at a “wait-and-see” approach, causing uncertainty about future rate cuts. With limited economic data and cautious market mood, the outlook for the Pound remains weak. In conclusion, GBP/USD’s fall underscores the impact of US monetary decisions and politics on currency values, as the Dollar gains amid reduced expectations for aggressive Fed moves.
Given the Federal Reserve’s recent actions on October 29, 2025, we see a clear path for a stronger dollar in the near term. The break below the 200-day EMA in GBP/USD is a significant technical signal that confirms the bearish momentum. We should therefore position for further pound weakness against the dollar over the next several weeks.
For those trading derivatives, buying GBP/USD put options with December or January 2026 expiries appears to be a prudent strategy. This allows us to capitalize on downside potential while strictly defining our maximum risk to the premium paid. The market’s repricing of future Fed rate cuts provides the fundamental driver for this trade.
UK Domestic Data And Strategy
This bearish view on the pound is reinforced by recent domestic data out of the UK. The latest Office for National Statistics release showed UK GDP growth for the third quarter was a sluggish 0.1%, while core inflation has fallen to 2.4%. These figures give the Bank of England little reason to consider a hawkish stance, leaving the pound fundamentally unsupported.
Conversely, the Fed’s cautious tone is understandable when we consider the resilience of the US labor market. The last Non-Farm Payrolls report in early October 2025 showed a healthy addition of 215,000 jobs, keeping the unemployment rate at a low 3.8%. This underlying economic strength justifies the Fed’s hesitation to promise further rate cuts, supporting the dollar’s value.
We have seen this pattern before, such as during the Fed’s policy pivot in 2019, where an initial “hawkish cut” also led to a period of dollar strength. In that instance, markets had to swiftly unwind expectations of a deep easing cycle, pushing the dollar higher against its peers. The current environment feels remarkably similar, suggesting this dollar rally has more room to run.
The ongoing US government shutdown introduces a layer of uncertainty that should keep implied volatility elevated. While this makes buying options more expensive, it also means that a correctly anticipated move could be highly profitable. Traders could also consider using bear put spreads to lower the entry cost of a bearish position while targeting a specific downward range for GBP/USD.
