GBP/USD Analysis on December 22, 2025

[Ben Graham]

For GBP/USD, the wave count continues to indicate the formation of an upward trend segment (lower chart), although over the past six months it has taken on a complex and extended form (upper chart). The trend segment that began on July 1 can be considered wave 4, or any global corrective wave, since it clearly has a corrective rather than impulsive internal wave structure. The same applies to its internal sub-waves. The downward wave structure that started on September 17 took on a five-wave form a–b–c–d–e and has now been completed. At present, the pair is in the stage of forming a new upward wave sequence.

Of course, any wave structure can become more complex and extended at any moment. Even the presumed wave 4, which has been forming for six months, could take on a five-wave form, in which case we would observe a correction for several more months. However, at the current moment, there are good chances for the formation of an upward wave sequence. If this is indeed the case, then the first two waves of this segment have already been completed, and we are now observing the development of wave 3 or C, which is taking on an impulsive form and gives hope for an impulsive character of the current wave sequence.

The GBP/USD pair gained around 70–80 points during Monday, which may have left many market participants puzzled. Last week, when the market was receiving tons and gallons of highly important information every day, the amplitude of price movements was relatively low. A new week begins, the economic calendar looks more like a desert, many countries around the world will celebrate Christmas on Friday, and the British currency suddenly soared. What is happening?

In my view, nothing extraordinary. The current wave count continues to point to an upward trend segment. And what should one expect from an instrument in an upward trend if not growth? Today, the UK released its Q3 GDP report; the figure did not disappoint and matched market expectations. This is a rather weak reason for such active buying of the pound, but I would remind you that demand for the European currency also increased today. Therefore, most likely, the GDP report is not the main reason.

The market became saturated with dollar buying during the "shutdown" and the easing of the Fed's monetary policy, which in itself looked strange. The GBP/USD pair formed an extended corrective wave 4, something few had expected. Therefore, the pair is now rising actively because the wave count requires it. I do not place much faith in the "thin market" theory, but I do allow that the 2026 holidays may bring a few surprises. In fact, the surprises have already begun, as no one expected such strength from the British pound on Monday. A successful breakout of the 1.3450 level, which corresponds to 61.8% Fibonacci, would indicate the market's readiness to continue buying the pound.

General Conclusions

The wave picture of GBP/USD has changed. The downward corrective structure a–b–c–d–e within wave C of wave 4 appears complete, as does wave 4 as a whole. If this is indeed the case, I expect the main trend segment to resume its development with initial targets around the 38 and 40 levels.

In the short term, I expected the formation of wave 3 or C with targets located near 1.3280 and 1.3360, corresponding to the 76.4% and 61.8% Fibonacci levels. These targets have been reached. Wave 3 or C is still under construction, and at present we are seeing a fourth attempt to break through the 1.3450 level, which corresponds to the 61.8% Fibonacci level.

The higher-timeframe wave count looks almost ideal, even though wave 4 moved beyond the high of wave 1. However, I would remind you that ideal wave counts exist only in textbooks. In practice, everything is much more complex. At the moment, I see no reason to consider alternative scenarios to the upward trend segment.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often imply changes.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. There is no and can never be 100% certainty about market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

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