GBP\/USD rose for a fourth session on Thursday, up 0.31% and trading in the mid-1.3400s. It reached 1.3480 before easing back, with 1.3400 to 1.3450 acting as a firm cap, and it has rebounded about 300 pips from near 1.3150 in early April.<\/p>\n
A two-week US-Iran ceasefire has reduced demand for the US Dollar as a safe haven. February US PCE inflation printed hotter than expected at 12:30 GMT, with headline at 2.8% YoY versus 2.6% consensus, core at 3.0% YoY, and both measures at 0.4% MoM.<\/p>\n
Markets now focus on the March US CPI release on Friday at 12:30 GMT. Forecasts are 0.8% MoM headline with about 3.1% to 3.3% YoY, and core at 0.2% to 0.3% MoM and 2.7% YoY.<\/p>\n
GBP\/USD was around 1.3435 and remains above the 50-day and 200-day EMAs at 1.3388 and 1.3372. Stochastic RSI is near 62, while rate futures imply almost no chance of a Fed cut before September.<\/p>\n
Looking back at the situation in the spring of 2025, we can see the difficulty GBP\/USD had in breaking above the 1.3450 resistance level. That ceiling proved significant, as the pair was unable to sustain those highs. We are now trading closer to 1.2720, showing how the US Dollar’s yield advantage ultimately dominated.<\/p>\n
The inflation concerns noted in 2025 have not disappeared and are central to our current strategy. With recent data showing US CPI still firm at 3.5% and UK inflation at 3.2%, the Federal Reserve remains more cautious than the Bank of England. This interest rate difference continues to weigh on the pound, making it difficult for the currency to rally meaningfully.<\/p>\n
Given this context, derivative traders should consider positioning for limited upside in GBP\/USD. Buying put options can offer downside protection or a direct bet on the pair falling further toward the 1.2600 level. Implied volatility has been relatively subdued, with the GBPUSD 1-month volatility index hovering around 6.5%, making option premiums relatively inexpensive.<\/p>\n
Alternatively, selling call spreads with a ceiling around the 1.2800 to 1.2850 area could be a prudent strategy. This approach profits if the pair moves sideways or down, capitalizing on the persistent resistance we have seen. This strategy aligns with the view that any rallies will be shallow and ultimately fade.<\/p>\n
We must also remember the geopolitical factors mentioned last year. While the US-Iran ceasefire was a focus then, ongoing global uncertainty continues to support the US Dollar as a safe-haven asset. This underlying bid for the dollar provides a constant headwind for currencies like sterling.<\/p>\n
The core issue remains the hawkish stance of the Federal Reserve, which was evident in 2025 and persists today. Rate futures markets are currently pricing in only one or two rate cuts from the Fed this year, a significant shift from earlier expectations. This reinforces the case for a stronger dollar and suggests any strength in GBP\/USD should be viewed with skepticism.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD extends rally to mid-1.3400s as ceasefire weakens dollar; hot PCE shifts focus to Friday CPI.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44596","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44596"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44596\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}