Insights 
VT 
GBP/USD has dropped to 1.3116, reaching six-month lows and down over 2% for October. The Pound has declined in nine of the last ten trading days, falling from 1.3450 to near 1.3100. It has moved below the 200-day Exponential Moving Average at 1.3275, suggesting further declines.
The Federal Reserve cut interest rates, but Chair Jerome Powell’s cautious remarks during the US federal shutdown affected market expectations. This led to a shift in market bets, delaying an anticipated rate cut and boosting the USD, fuelling a decline in GBP/USD since mid-October.
The Pound Sterling Overview
The Pound Sterling, the fourth most traded currency globally, is issued by the Bank of England. It plays a critical role in forex markets, with GBP/USD comprising 11% of transactions. Data releases like GDP and PMIs impact its value, with a strong economy potentially strengthening GBP. Conversely, weak data could result in a decline.
The Trade Balance measures the difference between export earnings and import expenses, impacting the Pound’s value. A positive balance strengthens the currency, while a negative one weakens it. Current market conditions present challenges, demanding strategic approaches in trading amidst uncertainties.
The Pound Sterling is clearly struggling against the US Dollar, now pushing toward the 1.3100 mark after reaching a six-month low. This significant downtrend has been consistent, with declines in nine of the last ten trading sessions. For derivative traders, this momentum suggests that bearish positions may continue to be profitable in the coming weeks.
Impact Of US Economic Indicators
We believe the US Dollar’s strength is a key factor, especially after the Federal Reserve’s recent cautious tone on future rate cuts. Supporting this view, the latest Core PCE Price Index data for September, released just this past week, came in hotter than expected at 3.9% year-over-year. This persistent inflation makes another near-term rate cut less likely and keeps the dollar firm.
On the UK side, recent data is not helping the Pound. Last week’s figures showed UK retail sales for September fell by 1.2% compared to the previous year, signaling a weakening consumer. This kind of softness in the economy gives the Bank of England little reason to consider supportive rate hikes.
Given this environment, buying GBP/USD put options seems like a straightforward strategy to consider. These options would profit from further declines below the current price levels. We should monitor implied volatility, as a rise could increase the cost of these puts but also reflects growing market uncertainty.
The technical picture reinforces this bearish outlook, as Cable has decisively broken below its 200-day exponential moving average near 1.3275. From our perspective here on October 31, 2025, this is often seen as a confirmation that the longer-term trend has turned negative. This break could attract more sellers to the market.
For those looking for a more risk-defined approach, a bear put spread could be an effective alternative. This involves buying a put option and simultaneously selling another put at a lower strike price. This strategy caps potential profits but also reduces the initial cost and risk of the trade.
