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15.12.2025 12:50 AM
The British pound remains in a far more vulnerable position compared to the euro. If you compare any two charts of the euro and the pound over the past few months, you will see that the British pound has fallen more sharply than the euro. We will not discuss the reasons for this disparity now, as that is history. Instead, let's talk about the chances of the pound continuing to rise against the US dollar.
In the euro currency outlook, I mentioned that the European Central Bank meeting should not be taken lightly. While it is possible that no significant decisions will be made and Christine Lagarde may refrain from issuing forecasts for 2026, the likelihood of a rate cut for the pound and the Bank of England is quite high, though not certain. If the market had no doubt about the FOMC's rate cut this week, there are sufficient grounds to doubt the new round of monetary policy easing by the BoE.
The main contradictions concern the MPC committee. Recently, many analysts have discussed divisions within the FOMC, but no one has mentioned the even greater disagreements within the MPC. Recall that in the last BoE meeting, the "hawks" won by a slim majority, and the interest rate remained unchanged. For the December meeting, experts predict a "dove" victory, also by a narrow margin. However, the actual voting results may differ from the predictions, in either direction. Just one dissenting vote from the "doves" could mean that a new easing of policy will not be adopted. Therefore, the British pound could either fall or rise.
In addition to the BoE meeting, I cannot overlook the unemployment report. In September, this figure jumped to 5%, exceeding market expectations, and it may rise to 5.1% in October. Andrew Bailey warned at the last meeting that unemployment would continue to grow, with a peak of 5.4%. However, it is unlikely that the British pound will welcome this planned increase in unemployment. This week, an inflation report will be released, exactly one day before the BoE meeting. Economists currently expect the consumer price index to slow to 3.4-3.5%, which could allow the MPC to vote for a rate cut on Thursday. I believe next week's prospects for the pound will be weak, but there is also US data that could create serious problems for the dollar.
Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend segment. Trump's policies and the Federal Reserve's monetary policy remain significant factors for the long-term decline of the US dollar. The targets of the current trend segment may extend to the 25th figure. The current upward wave formation is beginning to develop, and one hopes we are observing the construction of an impulse wave set that is part of the global wave 5. Therefore, we should expect a rise to the 25th figure, as I have mentioned before.
The wave structure of the GBP/USD instrument has changed. We continue to deal with an upward impulse trend segment, but its internal wave structure has become complex. The downward corrective structure a-b-c-d-e in C of 4 appears complete, as does the entire wave 4. If this is indeed the case, I expect the main trend segment to resume its formation with initial targets around the 38th and 40th figures.
In the short term, I anticipate wave 3 or c, with targets around 1.3280 and 1.3360, which correspond to 76.4% and 61.8% Fibonacci retracement levels. These targets have been reached. Wave 3 or c continues its formation, and the current wave set is beginning to take on an impulsive appearance. Therefore, one can expect continued price increases with targets around 1.3580 and 1.3630.
