Having hit a double bottom at the lows in November, the GBPUSD pair is now making a comeback. Although bears occasionally attempt to tip the scales, any declines remain confined within key Fibonacci support levels. The next milestone for buyers will be the 61.8% Fibonacci threshold at 1.345, where the double-bottom setup would truly pay off. This target, however, is not the end of the road for the uptrend. Instead, reaching it may signal a breather—a local correction before the pair potentially catches its second wind.
Indicators are starting to wave a pullback. The RSI has entered overbought territory for the first time since late April, setting the stage for a potential retreat once 1.345 is reached. Meanwhile, the MACD has recently crossed into the green without showing any signs of turning. A threatening "death cross" on the daily chart was ultimately nipped in the bud when the 50- and 200-day moving averages pulled apart before crossing.
The dollar's loss is the pound's gain. In fact, the greenback remains on the back foot following the Federal Reserve's (Fed) decision to take another chip off the block, cutting its key rate by 0.25% to the 3.5–3.75% range. Although Chairman Jerome Powell avoided the floodgates to dovish policies in his press conference, the market is still betting on further monetary easing from the regulator in 2026. With the official's term expiring in May and his likely replacement by a Donald Trump appointee, the pressure on the Fed to keep cutting is about to ramp up.
Across the Atlantic, the Bank of England (BoE) is gearing up for its final 2025 meeting on December 18, with analysts unanimously expecting a 0.25% borrowing cost reduction, just like the last one. Yet, a meaningful divergence lies ahead: Governor Andrew Bailey has recently told the Financial Times that quantitative tightening (QT) will continue, albeit at an annual pace of £70 billion, down from £100 billion. This stance contrasts sharply with that of the Fed, which halted its balance sheet unwinding in December. Such a growing policy gap keeps stacking the deck in favor of further GBPUSD appreciation.
Consider the following strategy for your trading:
Buy GBPUSD at the current price. Take profit: 1.345. Stop loss: 1.328.
This content is for informational purposes only and is not intended to be investing advice.
