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The Pound Sterling (GBP) trades flat around 1.3500 against the US Dollar (USD) during the European trading session on Tuesday, close to an over three-month high of 1.3535 posted last week. The GBP/USD pair consolidates as the US Dollar wobbles ahead of the release of Federal Open Market Committee (FOMC) Minutes of the December meeting, which will be published in the late New York session. At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 98.00. Investors await the FOMC minutes to get detailed cues on policymakers’ views on the monetary policy outlook. In the last policy meeting, the Fed delivered its third interest rate cut of year, pushing them lower to 3.50%-3.75%. The Fed’s Summary of Economic Projections, which included the dot plot, showed that policymakers collectively see the Federal Funds Rate heading to 3.4% by the end of 2026. This suggests that there will be only one interest rate cut next year. The projected reduction in interest rates by the Fed in 2026 is lower than what market participants are anticipating. According to the CME FedWatch tool, traders are extremely confident that the Fed will cut borrowing rates by at least 50 basis points (bps) before 2026 ends. Daily digest market movers: BoE guides gradual easing cycle The Pound Sterling has been trading broadly firm against its major peers over the past few weeks in anticipation that the Bank of England (BoE) will slow down the pace of reducing interest rates in 2026. In the policy meeting earlier this month, the BoE reduced interest rates by 25 bps to 3.75% and guided that the monetary policy will remain on a gradual downward path. The BoE retained a gradual monetary easing outlook as the United Kingdom (UK) inflation…

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Filed under: News - @ December 30, 2025 9:27 am