GBP/USD Analysis on December 23, 2025

[Ben Graham]

For GBP/USD, the wave count continues to indicate the formation of an upward segment of the trend (bottom chart), but over the past six months it has taken on a complex and extended form (top 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 an impulsive internal wave structure. The same applies to its internal sub-waves. The downward wave structure that began on September 17 took the form of a five-wave pattern a–b–c–d–e and has been completed. The instrument is now in the stage of forming a new upward wave sequence.

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

The GBP/USD pair gained about 30 basis points during Tuesday and about 80 points the day before. The construction of the presumed wave 3 or c of the new upward trend segment continues, so the strengthening of the British pound does not concern me. What does concern me is the market's reaction to today's U.S. statistics and the statistics themselves.

As I already mentioned in the EUR/USD review, U.S. economic growth raises many questions. Can anyone explain how an economy can grow at record rates amid rising unemployment, an extremely "cooled" labor market, falling inflation, weak business activity, continuously declining industrial production, and weak retail sales? It appears that third-quarter growth was once again "artificial," driven by customs duties on imports into the U.S. There are no other plausible explanations.

Market participants cannot fail to understand that weak economic data and strong GDP figures do not align with each other. Therefore, an increase in demand for the dollar based on strong GDP data looks questionable and short-lived. Based on this, I believe that the rise of the U.S. currency will not last long—unless the market decides to continue forming corrective wave 4 and complicate it into a five-wave structure. This scenario cannot be ruled out, but I still believe we are unlikely to see it materialize.

General Conclusions

The wave picture for GBP/USD has changed. The downward corrective structure a–b–c–d–e within C in 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 around 1.3280 and 1.3360, which correspond to the 76.4% and 61.8% Fibonacci levels. These targets have been reached. Wave 3 or c continues to develop, and at present a fourth attempt is being made to break through the 1.3450 level, which corresponds to the 61.8% Fibonacci retracement. The movement targets are 1.3550 and 1.3720.

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

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often signal changes.
2. If there is no confidence in what is happening in the market, it is better to stay out of it.
3. There is no such thing as 100% certainty in market direction. Never forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

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