GBP/USD continues to decline for the third consecutive day, falling over 0.25% as it slips below 1.3200, influenced by the Federal Reserve’s latest rate decision. It is currently trading at 1.3160, after reaching a daily high of 1.3218.

The Federal Reserve recently reduced rates to 3.75%-4% amid a prolonged US government shutdown, though the decision was split among board members. They also announced the termination of Quantitative Easing on December 1, with no guarantee of further rate cuts in December.

British Pound Under Pressure

The Pound Sterling faces pressure ahead of the upcoming Bank of England monetary policy decision and UK fiscal plans. Reports indicate possible changes to the windfall tax on the oil and gas sector and potential tax increases.

In the US, speeches from several Federal Reserve members are scheduled, which may provide further insights into the economic landscape. Technically, GBP/USD shows a bearish trend after dropping below the 200-day SMA, with potential support levels at 1.3000 and 1.2708.

The Pound Sterling, issued by the Bank of England, accounts for 12% of FX transactions, averaging $630 billion daily. It is influenced by the BoE’s monetary policies, economic data, and trade balance, affecting its global trading value.

The Federal Reserve’s recent actions suggest we should prepare for a stronger US dollar in the weeks ahead. While they cut rates, Chairman Powell’s comments signal a reluctance to ease further, especially with the latest core PCE inflation data from September 2025 still showing a stubborn 3.8%. This hawkish surprise means derivative positions favoring the dollar against other currencies, particularly the pound, are looking attractive.

Implications Of Technical Breakdown

At the same time, we are seeing increasing pressure on the Pound Sterling due to domestic uncertainty. With UK inflation recently reported at 3.1% and Q3 2025 GDP growth at a mere 0.1%, the Bank of England is in a difficult position ahead of its meeting next week. The conflicting reports about tax hikes and cuts from the Chancellor’s office only add to this nervousness.

The drop below the 200-day moving average around 1.3242 is a significant technical signal that we cannot ignore. Historically, such breaks often lead to sustained downward momentum, as we observed during the volatility in late 2022. This technical breakdown reinforces the fundamental case for expecting further downside toward the 1.3000 level.

Given this outlook, buying GBP/USD put options with expirations in late November or December 2025 appears to be a prudent strategy. This approach allows us to capitalize on a potential slide towards the 1.3000 psychological level, while capping our risk to the premium paid. It is a direct play on the increasing probability of further pound weakness.

We should also watch for an increase in market volatility around the upcoming UK budget announcement and US employment data. Recent US weekly jobless claims falling to 215,000 support the Fed’s view of a tight labor market, making any future data releases highly influential. Any signs of US economic strength will likely accelerate the decline in GBP/USD.

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