Created on December 30, 2025

• The British pound has been pretty choppy during the Monday session as we continue to hover around the 1.35 level.

GBP/USD

The 1.35 level, of course, is a large, round, psychologically significant figure and an area that a lot of people will be watching, as it has been important a couple of times in the past. Nonetheless, I think we have a situation where there is a lack of volume. I do not know how much I read into the price action at the moment.

Yes, the US dollar has softened quite a bit over the last couple of weeks, but we also have to keep in mind that there are some concerns about the global economy. If that ends up being the case, it does make a certain amount of sense that the US dollar still has a bit of demand.

Fed Rate Cuts

Furthermore, you have to understand that some of the leading indicators and data have thrown a bit of a monkey wrench into the plans of those who are looking to sell off the US dollar based on loosening monetary policy. It is not that rare that the Federal Reserve starts cutting rates and then the US dollar strengthens shortly afterwards. That is mainly because it is a sign of potential stress in the system. However, the fundamentals do not matter if the price ends up doing something completely different.

At this point, if we do break out to the upside, I think the 1.37 level is a potential target, perhaps even the 1.38 level. If we turn around and break below the 1.3450 level, then we could go down to the 1.33 level. Ultimately, this is a market that I think is at a major inflection point, and we need to watch it very closely. I suspect that this is all about the US dollar, so watch the US dollar against other currencies. It could give you a bit of a heads-up.

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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.