GBPUSD set to resume uptrend after holiday break

The GBPUSD pair climbed to a fresh two-month high near 1.3533, though it has since settled down into a flat. The main driver last week was all about regulatory moves: the Bank of England (BoE) cut interest rates while hinting the easing cycle could soon tap the brakes. In the meantime, markets were pricing in at least two Federal Reserve (Fed) reductions for 2026. This has narrowed the yield gap in the pound's favor and kept the dollar on the defensive.

Broadly, the greenback is under fire due to structural headwinds. The Dollar Index is now trading at its lowest since October, on track for its biggest annual drop since 2003. Even an upbeat US GDP print failed to shift the mood, as investors remain convinced the Fed's easing cycle is here to stay. In such an environment, the pound—like other major currencies—is catching a steady bid.

Nevertheless, market players believe the current pause is being shaped by geopolitics. Escalating tensions in Venezuela and Eastern Europe are prompting investors to flock to safe havens like gold and the greenback. Although the pound has performed well this year, thin holiday liquidity and a corrective backdrop could trigger short-term outflows from GBP. The recent lull in volatility is partly seasonal, yet core trends remain firmly in place. 

From a technical standpoint, the charts echo the need for a breather. In fact, GBPUSD is still in a strong uptrend. However, today's red candle suggests a near-term pullback or extended consolidation may come into play. This view is backed by the Stochastic Indicator, now flirting with overbought levels, and the Chaikin Oscillator—though still positive—showing buying momentum has cooled off since its December 22 peak.

Consider the plan down below for your trading:

Buy GBPUSD when the price corrects to 1.34520. Lock in profits at 1.35700. Place Stop Loss at 1.34150.

This forecast is valid from December 26, 2025 till January 2, 2026.