### GBP/USD Consolidation Signals Any drop in GBP/USD could be a good buying opportunity, especially with the 100-day SMA at 1.3365-1.3370 acting as a bullish sign. Since there are no major economic reports on Monday, traders will pay attention to comments from BoE MPC Member Alan Taylor. The Pound Sterling, which is used in the UK, is the fourth most traded currency in the world. The Bank of England’s interest rate decisions greatly impact its value, aiming for 2% inflation to maintain price stability. Economic data such as GDP and the Trade Balance also affect the direction of the GBP. Generally, stronger data boosts the currency’s value. As of today, December 8, 2025, GBP/USD is around the 1.2850 level, a shift from the 1.3330 levels discussed previously. With both the Federal Reserve and the Bank of England set to announce their policies next week, traders are exercising caution. This reflects a common pattern of waiting for central bank guidance before making large trades. ### Fed’s Hawkish Outlook The earlier expectation of a dovish Federal Reserve has shifted by late 2025. With US core inflation steady at 3.1% through November, the Fed is adopting a ‘higher for longer’ approach to ensure price stability. This hawkish stance supports the US Dollar, limiting major gains for the GBP/USD pair. On the UK side, fiscal measures introduced by Chancellor Reeves in 2023 have stabilized government finances, but economic growth remains slow. Recent Q3 2025 GDP figures showed only a 0.1% growth, while inflation remains high at 3.5%. This situation complicates the Bank of England’s ability to cut rates to encourage growth without risking another inflation increase. Because of these conditions, buying dips in GBP/USD, a strategy that may have worked before, is now more risky. Implied volatility for GBP/USD options, expiring after next week’s central bank meetings, has surged to a three-month high of 9.5%. Traders might want to consider buying put options to protect against a potential drop below the 1.2800 support level. From a technical perspective, the previous resistance at the 100-day SMA near 1.3370 is now a thing of the past. We are currently focused on the 50-day SMA, which is providing strong resistance at the 1.2910 level. The pair’s failure to close above this level for the last three weeks shows that sellers are in control right now. Create your live VT Markets account and start trading now.

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