GBP/USD Forecast on December 31, 2025

[Ben Graham]

On the hourly chart, the GBP/USD pair on Tuesday completed another rebound from the resistance level of 1.3526–1.3539, reversed in favor of the U.S. dollar, and showed a fairly strong decline with consolidation below the 100.0% Fibonacci level at 1.3470. Thus, the decline may continue toward the 1.3437 level; however, in the support zone of 1.3437–1.3470, a reversal in favor of the British pound may follow, with growth back toward the resistance zone of 1.3526–1.3539.

The wave situation remains "bullish." The most recent completed upward wave broke the previous high, while the new downward wave has not yet been able to break the previous low. The news background for the pound has been weak in recent weeks, but the information background in the United States also leaves much to be desired. Bulls and bears spent a week in a tug-of-war and were in relative balance, but a week before the New Year, the bulls launched a new offensive that has not yet been completed.

The news background on Tuesday was virtually absent, but in the evening the minutes of the December FOMC meeting were published, which some traders had pinned certain hopes on. I would like to note right away that the rise of the U.S. dollar began a couple of hours before the start of the U.S. trading session. The Federal Reserve minutes were published nine hours later. Thus, this document could not have had any influence on trader sentiment during the day. Nevertheless, the minutes once again showed a split of opinions within the FOMC committee. The document states that the decision to cut the interest rate was made with a "dovish" majority of six votes, but even among the "doves," doubts about the correctness of such a decision were very noticeable. I remind you that as of December 10, the latest reports on the U.S. labor market, unemployment, and inflation had not yet been published—reports on which the Fed usually bases its decisions. Therefore, the doubts of many FOMC members are quite understandable. One way or another, the minutes were released at a time when the dollar's rise had already ended.

On the 4-hour chart, the pair consolidated above the 100.0% corrective level at 1.3435, which allows expectations of continued growth toward the next Fibonacci level of 127.2% at 1.3795. A "bearish" divergence has formed on the CCI indicator, which caused a reversal in favor of the U.S. dollar and a small decline toward the support zone of 1.3369–1.3435. A rebound of quotes from the 1.3435 level would allow expectations of renewed growth in the pound.

Commitments of Traders (COT) Report:

Sentiment among the "Non-commercial" category of traders became more "bullish" over the last reporting week. The number of long positions held by speculators increased by 1,649 units, while the number of short positions decreased by 25,368. The gap between the number of long and short positions is currently essentially as follows: 61 thousand versus 110 thousand. As we can see, bears dominate in December, but the pound seems to have already exhausted its downward potential. At the same time, the situation with euro contracts is exactly the opposite. I still do not believe in a "bearish" trend for the pound.

In my view, the pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency may enjoy demand in the market from time to time, but not in the long term. Donald Trump's policies have led to a sharp deterioration in the labor market, and the Fed is forced to pursue monetary easing in order to stop the rise in unemployment and stimulate job creation. For 2026, the FOMC does not plan significant monetary easing, but at the moment no one can be sure that the Fed's stance will not shift to a more "dovish" one during the year.

News Calendar for the U.S. and the UK:

On December 31, the economic calendar contains no entries. The influence of the news background on market sentiment on Wednesday will be absent.

GBP/USD Forecast and Trading Advice:

Selling the pair was possible after a rebound from the 1.3526–1.3539 level on the hourly chart with a target of 1.3470. The target was reached. I would not rush into new sell positions until there is a close below the 1.3437 level. I recommended buying on a rebound from the 1.3437–1.3470 level with a target of 1.3533–1.3539. The target was achieved. New buy positions are recommended after another rebound from the 1.3437–1.3470 level.

Fibonacci grids are built from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.

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