What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-07 · 31 added, 18 removed, 64 unchanged (43% of the section changed)

46 unchanged sentences

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

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:

The interest rate in effect as of June 30, 2026 was an annual nominal rate of 2.46%.

The following chart provides the daily rate paid by the Depository since June 30, 2021:

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

12 unchanged sentences

Results of Operations

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.

As long as the interest income, if any, exceed the Sponsor’s fee and the interest expense on currency deposits, the Trust will incur a net comprehensive income.

During the three and six months ended June 30, 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 and six months ended June 30, 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 and six months ended June 30, 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 and six months ended June 30, 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) delivered negative performance during the second quarter of 2026 as the U.S.

Dollar ("USD") strengthened amid a more hawkish U.S.

interest rate outlook and continued safe-haven demand from geopolitical tensions.

However, interest income helped the fund post a small gain to end the quarter.

While progress toward a U.S.-Iran ceasefire and easing concerns over Middle East energy supply disruptions reduced some of the energy-related risks facing the U.K.

economy, sterling was weighed down by signs of slowing U.K.

economic growth and increased political uncertainty following Prime Minister Keir Starmer's resignation announcement in June.

The Bank of England ("BoE") maintained the Bank Rate at 3.75% throughout the quarter, with some policymakers favoring rate hikes as inflation remained above target.

This provided some support but was not enough to offset USD strength.

The British Pound Sterling (GBP/USD) ended the second quarter of 2025 significantly higher, driven primarily by continued weakness in the USD.

Despite a 25 basis-point rate cut by the BoE during the quarter, the pound appreciated as investors moved away from the dollar amid persistent concerns over U.S.

economic policy and deteriorating sentiment toward American assets.

The dollar’s broad-based decline was the dominant force behind the pound’s strength, overshadowing domestic monetary policy decisions in the UK.

The British Pound Sterling (GBP) delivered negative performance year-to-date through the second quarter of 2026 as a stronger USD and heightened geopolitical uncertainty outweighed periods of sterling resilience.

In the first quarter, GBP was pressured by rising Middle East tensions, which drove higher energy prices and increased demand for the USD as a safe-haven asset.

During the second quarter, easing concerns over energy supply disruptions provided some relief, but sterling continued to face headwinds from slowing U.K.

economic growth and heightened political uncertainty following Prime Minister Keir Starmer's resignation announcement in June.

The BoE maintained a relatively restrictive policy stance throughout the period, including holding the Bank Rate at 3.75% in June with some policymakers favoring rate hikes, which provided some support, but was insufficient to overcome the broader strength of the USD.

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

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.

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

Despite a 25 basis-point rate cut by the BoE during the second quarter, the pound continued to strengthen, reflecting that the primary driver of performance has been the broad based decline in the USD.

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

As long as the interest income, if any, exceeds the Sponsor’s fee and the interest expense on currency deposits, the Trust will incur a net comprehensive income.

Quantitative and Qualitati ve Disclosures About Market Risk.

2 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