GBPUSD Eyes Key Resistance at 1.3500 Amid Hawkish BoE Hopes

The British Pound Sterling (GBP) has been on an upward trend since its late-July low of 1.32737, driven by disappointing U.S. GDP and NFP reports that lowered Federal Reserve rate hike expectations and weakened the dollar.

At present, GBPUSD is testing the psychologically important 1.35000 level, with a near-convergence of GBP and USD rates reflected in the flat forward curve over six months.

The options volatility surface shows a persistent GBP-put skew that widens with tenor, suggesting that GBPUSD downside protection is in demand, as investors buy puts to hedge against potential losses.