Pound Sterling Movement

The Pound Sterling has slightly dropped to 1.3500 against the US Dollar in quiet pre-Christmas trading. The S&P 500 is expected to grow in 2026, thanks to Trump’s economic policies. Silver is rising for the fourth day in a row, driven by hopes for Federal Reserve easing and its appeal as a safe investment. The EUR/USD remains below 1.1800 with little movement, as US markets have shorter hours on Christmas Eve. Bitcoin has fallen below $87,000 due to increasing ETF outflows and reduced activity from major investors. The economic outlook for 2026 looks strong, with supportive factors from 2025 likely to boost performance. Avalanche is facing challenges around $12, while Grayscale has filed to convert its Trust into an ETF.

Prospects For 2026

We are currently in holiday-thinned markets, but the main focus for the upcoming weeks is the clear expectations for Federal Reserve easing. This is keeping the US Dollar weak, as shown by the US Dollar Index (DXY) dropping nearly 8% since its peak in mid-2025. Traders in derivatives should prepare for this dollar weakness to continue into the new year, creating opportunities in currencies like the Canadian Dollar. Gold has retreated from its record high above $4,520, but this seems more like temporary profit-taking than a major trend shift. Central bank purchases of gold reached a record over 1,200 tonnes in 2025, providing a strong support level. It may be wise to use options to gain exposure to potential gains in precious metals or to protect existing long positions, given the high price levels. The outlook for the S&P 500 in 2026 is positive, with expectations of solid growth from a government expected to “run it hot.” After the index rose over 20% in 2025, traders might prepare for another strong year by selling puts on stock index futures to earn premium during this quiet time. Volatility is low now but may increase in January, making selling options appealing. Bitcoin currently trades near $87,000, but we see signs of short-term weakness with four consecutive days of ETF outflows. After significant inflows following their approval in early 2024, this recent trend shows that some large players are taking profits. This could create opportunities for short-term bearish strategies using options on Bitcoin futures. The expectation for Fed rate cuts is strengthening, and this should be considered in all future positions. The CME FedWatch Tool now shows a greater than 90% chance of at least one rate cut by the March 2026 meeting. This makes long positions in interest rate futures an increasingly popular, yet sensible, strategy. Create your live VT Markets account and start trading now.

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