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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-07 · 19 added, 35 removed, 63 unchanged (46% of the section changed)

7 unchanged sentences

These factors include fluctuations in the price of the British Pound Sterling, as the value of the Shares relates directly to the value of the British Pounds Sterling held by the Trust and price fluctuations could materially adversely affect an investment in the Shares.

Readers are urged to review the “Risk Factors” section contained in the Trust’s most recent Annual Report on Form 10-K, together with the modified risk factor included in Item IA of this report, for a description of other risks and uncertainties that may affect an investment in the Shares.

Readers are urged to review the “Risk Factors” section contained in the Trust’s most recent Annual Report on Form 10-K, for a description of other risks and uncertainties that may affect an investment in the Shares.

Neither Invesco Specialized Products, LLC (the “Sponsor”) nor any other person assumes responsibility for the accuracy or completeness of forward-looking statements contained in this report.

34 unchanged sentences

The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust’s liquidity and capital resources needs.

The Trust’s Depository, JPMorgan Chase Bank, N.A., London Branch, maintains two deposit accounts for the Trust, a primary deposit account that may earn interest and a secondary deposit account that does not earn interest.

The Trust’s Depository, JPMorgan Chase Bank, N.A., London Branch, primarily maintains two deposit accounts for the Trust, a primary deposit account that may earn interest and a secondary deposit account that does not earn interest.

Interest on the primary deposit account, if any, accrues daily and is paid monthly.

The interest rate in effect as of September 30, 2025 was an annual nominal rate of 2.66%.

The following chart provides the daily rate paid by the Depository since September 30, 2020:

The interest rate in effect as of March 31, 2026 was an annual nominal rate of 2.46%.

The following chart provides the daily rate paid by the Depository since March 31, 2021:

In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.

9 unchanged sentences

These estimates and assumptions affect the Trust’s application of accounting policies.

In addition, please refer to Note 3 to the financial statements of the Trust for further discussion of the Trust’s accounting policies and Item 7 – Management’s Discussions and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 26, 2025.

In addition, please refer to Note 3 to the financial statements of the Trust for further discussion of the Trust’s accounting policies and Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 2, 2026.

There were no material estimates, which involve a significant level of estimation uncertainty and had or are reasonably likely to have had a material impact on the Trust's financial condition, used in the preparation of these financial statements.

Results of Operations

During the three and nine months ended September 30, 2025 and 2024, the Trust's net comprehensive income (loss) was, in part, impacted by market volatility resulting from global tariff gyrations and mounting U.S.

economic uncertainty for 2025, and expectations around the Federal Reserve (the “Fed”) easing and heightened geopolitical concerns for both 2024 and 2025, which are considered to be unusual or infrequent events.

Although the full and direct impact of global tariffs, U.S.

economic concerns, Fed easing expectations and rising geopolitical tensions, on the Trust's net comprehensive income (loss) during the three and nine months ended September 30, 2025 and 2024, cannot be known, it is believed that they have each independently impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.

The British Pound Sterling (GBP/USD) came under some pressure in the third quarter of 2025.

While the largest headwind was regained USD strength, the pound was also influenced by the combination of renewed central bank policy uncertainty and stagflation risk domestically.

In the UK, fiscal sustainability concerns remained at the forefront ahead of the autumn budget deadline, as higher borrowing costs have strained public finances along with political pressures to retain higher spending levels.

While UK inflation remained sticky, limiting the depth and pace of the Bank of England’s easing cycle, growth also faded, and policy uncertainty around these trends weighed on the pound.

The British Pound Sterling (GBP/USD) rallied in the third quarter of 2024 with the fund posting its strongest quarterly gain since the fourth quarter of 2022.

The upward moves were mainly due to a falling U.S.

dollar though growing optimism on UK’s economy also provided support.

Improving retail sales growth and stubborn inflation fueled expectations that the Bank of England (BoE) would ease rates more gradually than other central banks, particularly the Fed, which kicked off its easing cycle in September.

The British Pound Sterling (GBP/USD) posted strong gains year-to-date through the third quarter of 2025, largely driven by sustained weakness in the U.S.

In the first quarter, the pound advanced steadily as investors reacted to shifting expectations around U.S.

monetary policy and growing concerns over the fiscal outlook in the U.S.

This trend continued into the second quarter, with the dollar facing additional pressure from unclear trade policies and deteriorating sentiment toward American assets.

However, the dollar recovered a bit in the third quarter, erasing some of the earlier gains in the pound.

In the first quarter, while the greenback benefitted from positive economic data surprises and progress on trade agreements, headwinds from the first half of the year continued to blow – notably, the Fed returned to cutting rates in September and the USD debasement trade grew in popularity.

The British Pound Sterling (GBP/USD) ended the first three quarters of 2024 higher.

While the pair saw strong gains in the

third quarter of 2024, it fluctuated throughout the first half of the year, mainly on U.S.

dollar moves.

The Fed’s higher-for-longer

rhetoric and sticky U.S.

inflation pushed out expectations for rate cuts, boosting the dollar.

However, British inflation also held up

better than expected, dimming rate cut bets for the Bank of England, and provided some support on the downside.

In the third quarter

of 2024, a resilient UK economy and stubborn inflation kept a more hawkish tone on BoE easing expectations, while the Fed kicked off its easing cycle in September, which a large 0.50% cut.

Higher rates boost the appeal of a country’s currency, in this case, the

During the three months ended March 31, 2026 and 2025, the Trust’s net comprehensive income (loss) was, in part, impacted by periods of market volatility associated with evolving global macroeconomic and geopolitical conditions, which are considered to be unusual or infrequent events.

For the three months ended March 31, 2026, these conditions included heightened geopolitical tensions, ongoing trade and fiscal policy uncertainty, and shifting expectations regarding the pace and timing of monetary policy actions by central banks, including the Federal Reserve.

For the three months ended March 31, 2025, contributors to market volatility included concerns surrounding global economic growth, inflation dynamics, and expectations related to potential changes in monetary policy.

Although the full and direct impact of these conditions on the Trust’s net comprehensive income (loss) during the three months ended March 31, 2026 and 2025 cannot be known, it is believed that they may have independently affected the Closing Spot Rate, the interest rate paid by the Depository, and global economic and market conditions generally, including the number of Shares created and redeemed by the Trust.

The British Pound Sterling (GBP) showed some periods of strength during the first quarter of 2026, but the Fund delivered negative performance as gains in the U.S.

dollar outweighed those moves.

GBP was pressured by heightened geopolitical tensions, particularly as the United Kingdom is a net energy importer and faced increased vulnerability to potential supply disruptions through the Strait of Hormuz.

Higher energy prices and concerns around energy security weighed on the currency, reinforcing demand for the U.S.

dollar as a safe haven.

Although higher U.K.

short‑term interest rates continued to support income generation and helped offset expenses, these factors were not sufficient to counter broader currency pressures during the quarter.

The British Pound Sterling ended the first quarter of 2025 higher, largely due to sharp losses in the US dollar.

Macroeconomic concerns reignited by President Trump’s shifting global tariff policies and growing stagflation fears dented consumer, investor, as well as business sentiment in the US, leading to a sharp downturn in US financial markets.

In addition, European currencies have been propped up by major defense and infrastructure spending plans, including in the United Kingdom (UK), which are expected to boost the region’s growth prospects.

Additionally, the interest rate paid by the Depository has generally trended downward over the past year with the current interest rate of 2.46%, as set forth in the FXB Rate Chart above.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis