Created on December 29, 2025

• The British Pound has outperformed most of its contemporaries against the US dollar, so even if the US dollar finds quite a bit of strength, it is more likely than not that the British Pound drifts lower, but at a slower speed.
• The British Pound initially rallied during the trading session on Friday, but then gave back quite a bit of significant momentum.
• With that being the case, traders will likely look at this through the prism of a market that is going to try to either break out or form a bit of a consolidation range.

I do believe that in the next couple of weeks we will make a significant decision, but as things stand right now, it looks very much like a market that I think is going to continue to see a lot of questions asked of it near the 1.35 level.

Levels to Watch

The 1.35 level is a level that I think has been important multiple times. If we pull back from here, and I think we could, the 1.34 level is an area that would be your initial target. Breaking down below there, then opens up the possibility of a drop down to the 1.32 level. All things being equal, I suspect that might be the initial move to a bigger pullback.

However, we have to understand that the US dollar will probably move in the same direction against most currencies and not just this one. So, with this, I think you have a scenario where if we were to break above the 1.36 level, then it is obvious that we have a much bigger move to the upside waiting to happen, perhaps to the 1.38 level. I do expect a lot of choppy and noisy behavior, but I also recognize that the British Pound has outperformed most of its contemporaries against the US dollar. We are at a major point of inflection that we need to be watching.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.