The GBP/USD pair is currently trading around 1.3460, down by 0.30%. Although it reached a three-month high of about 1.3535 recently, it lost steam due to uncertainty ahead of the upcoming FOMC Minutes. The Pound is stable near 1.3500 against the US Dollar, holding its ground as the US currency shows some weakness. This situation unfolds as we await the December FOMC Minutes during the New York trading session.

Early European Session

In the early European trading hours, GBP/USD climbed slightly to around 1.3510. The Bank of England’s plan for a gradual easing of monetary policy is giving the Pound support against the US Dollar. In other market activity, the Canadian Dollar remains flat, while the US Dollar is stronger amidst talks of potential rate cuts. The Dow Jones is down due to sector-specific issues. The EUR/USD pair continues to fall, and the NZD/USD is influenced by tensions in Taiwan and uncertainty over Fed policy. After the FOMC Minutes, the EUR/USD has dipped, while gold and Ethereum prices are steadier. Market attention is shifting to 2026 forecasts and Forex brokers for 2025. FXStreet shares insights without offering investment advice.

Approaching The New Year

As we near the new year, the GBP/USD pair is holding steady near its three-month high of 1.3535, showing uncertainty before the Federal Reserve’s meeting minutes. The trading around 1.3500 creates a critical moment for traders. The market is currently calm but may soon react significantly to the Fed’s policy outlook for 2026. We’re keeping a close eye on the differences between the Fed and the Bank of England. Recent US inflation data from November 2025 showed a welcome decrease to 2.8%, raising expectations for a rate cut in early 2026. This has led to increased implied volatility for short-term GBP/USD options as traders prepare for a potential breakout if the Fed leans towards a dovish stance. Meanwhile, the Bank of England seems to be taking a more cautious approach to gradual easing, which supports the Pound for now. UK’s wage growth, reported at 4.5% for the third quarter of 2025, continues to be a concern and explains the BoE’s slower strategy compared to the Fed. This difference in expected rate cuts is key to how the currency pair will move in the upcoming weeks. We have seen similar situations in the past, like after the 2008 financial crisis, when differing timelines from central banks created strong trading trends. Traders may want to consider options strategies like bull call spreads to position themselves for a move above 1.3535. This strategy provides a defined way to profit if the Fed’s minutes indicate more aggressive easing than expected. After the FOMC minutes are released, we will quickly turn our attention to the first major economic data for 2026, specifically the January employment and inflation reports from both the US and the UK. These will be crucial in testing the central banks’ commitments. Derivative positions should stay adaptable to accommodate this new data. Create your live VT Markets account and start trading now.

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