GBPUSD correction looms as Fed easing bets grow

The GBPUSD pair is still flying high after punching through 1.33839 yesterday, riding the wave of expectations that the Federal Reserve (Fed) is about to hit the brakes and ease its monetary stance. However, at these heights, the charts are starting to flash warning signs that the rally might be running on fumes, setting the stage for a classic technical pullback.

All the indicators are telling the same cautious story for buyers. The Stochastic Oscillator (%K=57 and %D=53) is neutral and drifting lower, which doesn't scream "strong momentum." Meanwhile, the real red flag is the Chaikin Oscillator, which is walking a different path than the price—a clear bearish divergence that often means funds are sneaking out. Toss in an RSI knocking on the door of overbought territory, and investors see a market that is getting a little long in the tooth. Such a condition typically precedes a pause or pullback.

Fundamentally, it is a tale of two countries. The pound has received a boost from a solid UK budget and upbeat Purchasing Managers' Index (PMI) data. However, this good news is likely to have been factored into the rally. Concurrently, cracks are starting to show in the British economy. 

As for the dollar, its weakness seems to be hinged on one thing: the expected pivot by the American regulator. In the rush to price that in, the market is turning a blind eye to some surprisingly robust US labor reports, where jobless claims have hit a rock-bottom low not seen in over three years.

With the fundamental picture pulling in opposite directions, the technicals are calling the shots—and they're screaming for a breather. The price is stretching way above the upper Bollinger Band, and the momentum gauges are waving every red flag in the book. Given this setup, a cooldown to find firmer footing looks like the next logical move.

The following plan for your trading may come into play:

Sell GBPUSD at current levels. Place Stop Loss at 1.34400. Set Take Profit at 1.31870.

This forecast is relevant from December 5 till December 12, 2025.