The GBP CFTC net positions rose to £-48.5K from £-75.5K, showing a change in market feelings towards the GBP. The USD/CAD bounced back as the US dollar strengthened, while oil’s support for the Canadian dollar weakened. At the same time, the EUR/USD dipped slightly on light trading and cautious market sentiment.

Euro And Pound Dynamics

The EUR/GBP price saw a small decline as the Bank of England supported the pound, while the ECB stabilized the euro. The USD/CHF improved, moving above 0.7900, indicating changes in market trends. GBP/USD dropped below 1.3500 amid light trading after Christmas. Gold continued its decline from a record high, driven lower by hopes for a peace deal between Ukraine and Russia. Bitcoin, Ethereum, and XRP saw about 3% gains as selling pressure eased. As peace talks between Russia and Ukraine continue, the outlook for cryptocurrencies appears positive. Looking ahead to 2026-2027, we expect strong performance, provided that helpful factors from 2025 remain in place. Avalanche is struggling around $12 as Grayscale updates its ETF filing with the US SEC. Sentiment towards the British Pound is shifting significantly, with traders reducing net short positions from £-75.5K to £-48.5K. This change suggests that bearish bets against the pound are fading, especially as we approach the new year. Traders should consider the possibility of a short squeeze, as holiday trading can lead to exaggerated price shifts.

Bank Of England And Inflation

This change comes as the Bank of England keeps rates steady to battle inflation, which stood at 3.1% in November 2025. With diminished risk around the pound, derivative traders may consider buying call options on GBP/USD to take advantage of potential gains in early 2026. This strategy allows for defined-risk positioning for a potential rebound from the recent fall below 1.3500. In the broader market, gold’s decline from its record high near $4,550 indicates a slight rise in risk appetite. This shift away from safe-haven assets aligns with renewed strength in cryptocurrencies like Bitcoin and Ethereum. Since the approval of spot Bitcoin ETFs in early 2024, institutional investments have driven much of this trend, and holiday season gains could signal a positive start to 2026. All eyes will soon be on the minutes from the Federal Reserve’s December 2025 meeting. With the Fed Funds rate stable at 4.75% for two quarters, any hint of a dovish shift could weaken the US Dollar and boost riskier assets. We should expect more volatility around this announcement, making straddles or strangles on major currency pairs a viable strategy for trading the outcome. Create your live VT Markets account and start trading now.

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