Insights 
VT 
Fed Rate Cut Possibility
There is a 78.6% likelihood of a 25 bps Fed rate cut in the two remaining meetings this year. The market awaits Fed Chair Jerome Powell’s speech for insights on the economic impact of the US government shutdown.
Concerns about UK fiscal debt contribute to Pound Sterling’s underperformance against major currencies. The UK Treasury plans to cut spending or raise taxes to manage fiscal borrowings, affecting the GBP.
Market participants are uncertain about the BoE’s monetary outlook due to sluggish job demand and persistent inflation. Investors await the UK employment data for the three months ending in August.
Technically, GBP/USD remains bearish, below the 20-day EMA at 1.3458. The RSI nears 40.00, with further bearish momentum likely if it dips lower. Key support is the August 1 low of 1.3140, while resistance is the September 17 high of 1.3726.
UK Economic Uncertainty
The Pound continues its slide against the Dollar today, Thursday, October 9th, 2025, falling towards 1.3365 as bearish sentiment takes hold. Technical indicators support this move, with the pair trading below its 20-day moving average and the Relative Strength Index nearing the 40.00 mark. This downward pressure creates a clear short-term trend for us to follow.
On the American side, the Federal Reserve’s path appears set, which provides a strange kind of strength for the dollar. Recent data showed September non-farm payrolls added only 95,000 jobs, confirming the “labour market risks” the Fed noted and solidifying expectations for two more rate cuts before year-end. This policy clarity, even if it is dovish, is preferable to the uncertainty seen elsewhere.
Across the Atlantic, the UK’s fiscal situation is causing significant concern ahead of the Autumn Budget. With public sector net debt now standing at over 103% of GDP, the government’s promises to rein in spending are creating anxiety about a potential slowdown in the economy. We remember all too well the market chaos that followed the unfunded spending plans announced back in September 2022, and traders are right to be cautious.
This contrasts sharply with the Bank of England’s dilemma, as it is caught between a weakening economy and persistently sticky inflation, which latest figures showed was still at 4.1%. This policy paralysis makes the Pound particularly vulnerable, especially when compared to the Fed’s more decisive stance. The uncertainty surrounding the BoE’s next move is a major source of weakness for the currency.
Given the number of upcoming event risks, including next Tuesday’s UK employment data and the November budget, we should anticipate a significant rise in volatility. This environment makes options strategies particularly attractive, as we can position for large price swings. For instance, buying GBP/USD put options would allow us to profit from a continued decline while capping our maximum loss.
The most direct play is to position for further weakness in the Pound relative to the Dollar. We should look at targeting the August 1st low of 1.3140 as a key support level to watch. A strategy of buying puts with a December 2025 expiration would not only capture the current downward momentum but also cover the risk associated with the UK’s budget release next month.
