**GBP/USD Forecast: 29 December 2025**
*Article based on analysis by Christopher Lewis, originally published on DailyForex*
The GBP/USD currency pair, often referred to as “Cable,” is closing out 2025 under heightened scrutiny as traders look to the final days of the year for any last clues about the months ahead. As the market continues to digest a complex cocktail of macroeconomic influences, technical signals, and geopolitical developments, the pound’s movement against the US dollar remains a focal point for forex traders worldwide. Here’s a comprehensive breakdown of current factors, technical setups, and forecast scenarios for GBP/USD as we approach 2026.
## Current Market Overview
Throughout December 2025, the GBP/USD pair has seen volatility shaped by:
– Divergence in US and UK monetary policy paths.
– Shifting risk sentiment as traders brace for the year’s end.
– Lingering effects from global events (energy prices, regional conflicts, global trade dynamics).
– Continued speculation on central bank actions and economic data releases.
### Fundamental Drivers at Play
#### 1. Central Bank Divergence
– The US Federal Reserve maintained a more hawkish tone through the fall, focused on ensuring inflation stays anchored to its 2 percent target. While there is speculation around rate cuts in early 2026 if inflation slows further, recent statements suggest any easing will be cautious.
– The Bank of England, conversely, has had to balance inflation concerns with slower UK economic growth figures. Subdued retail spending and softness in key sectors add pressure for a dovish pivot, though persistent services inflation and wage growth complicate the outlook.
#### 2. UK Economy versus US Economy
– The UK economy struggles with sluggish growth, weak consumer sentiment, and uncertainties in European trade relationships.
– The US economy, while slowing, has seen relatively better GDP performance and labor market resilience, lending strength to the dollar.
#### 3. Political and Geopolitical Factors
– The UK’s evolving trading relationship with the EU remains a background risk, particularly with a general election scheduled for 2026.
– The US faces potential political volatility as it approaches a presidential election in November 2026, but for now, political noise has had less direct impact on FX flows compared to economic data.
### Technical Analysis: Key Levels and Patterns
#### Weekly Chart Highlights
– The pound staged a moderate recovery from mid-December lows but remains under the key psychological level at 1.3000.
– Recent candles suggest indecision, with wicks both above and below tight-bodied candles, typical of end-of-year market churn.
– The 200-week moving average continues to offer dynamic resistance just above 1.2900.
#### Daily Chart Insights
– The pair rose from support near 1.2650, bouncing toward the 1.2800 handle, a region of prior congestion.
– Short-term moving averages (20- and 50-day) are beginning to flatten, highlighting a possible transition to a range-bound environment.
– RSI on daily charts hovers around the midpoint, indicating neither overbought nor oversold conditions.
#### Support and Resistance Levels
– Resistance:
– 1.2800: Recent high and congestion zone.
– 1.2900: 200-week moving average.
– 1.3000: Major psychological barrier, last seen in July 2025.
– Support:
– 1.2650: December low, tested multiple times.
– 1.2550: Key floor from late November.
– 1.2450: Stronger support dating back to September.
#### Chart Pattern Observations
– Lack of strong directional bias, with the pair stuck between converging trendlines that could signal a breakout if volatility increases in early January.
– Possible development of a symmetrical triangle on the 4-hour chart, which often precedes a significant price move.
## Market Sentiment and Positioning
– CFTC Commitment
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