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2025-07-29 14:13:18
[Analysis: Pound's Fall Sets the Stage for a Short Squeeze After the Fed's Meeting] The pound sterling fell to its lowest level against the dollar in over two months, as traders anticipate the Fed will keep interest rates unchanged and the Bank of England will cut them. A short squeeze is possible once the Fed's decision is announced. Forex traders are using the euro's weakness as a guise to bet against the pound, with the market pricing in a 25 basis point rate cut by the Bank of England on August 7. Given that short-term implied volatility is also relatively low, this presents an environment that aggressive traders are inclined to exploit. However, the pound has fallen over 3% from its July high against the dollar and has entered oversold territory. This is not the first time the pound has rebounded despite seemingly no support.
