GBP/USD Extends Bullish Momentum as the Dollar Weakens
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GBP/USD climbed approximately 0.45% on Tuesday, supported by a general decrease in global US Dollar (USD) flows. Investor sentiment is positive as we approach the midpoint of a holiday-shortened week, with the Greenback pressured by expectations for further easing by the Federal Reserve (Fed) into 2026. Dollar falls on Fed rate cut expectations On Tuesday, the US Dollar weakened in thin, holiday-shortened trading, as expectations of additional Fed rate cuts next year continued to dampen sentiment, despite stronger-than-expected economic data. A surprisingly robust annualized growth of 4.3% in US Gross Domestic Product (GDP) for the third quarter did not lead to a recovery against the Pound Sterling (GBP), which stepped into 12-week highs against the USD. Nevertheless, the market largely believes the Fed will maintain its position in January before resuming cuts later in the year, with futures indicating two cuts in 2026. Some analysts have warned that the positive headline GDP growth may overstate the economy’s true health. They point out that this growth was primarily driven by healthcare spending and inventory drawdowns, rather than widespread business momentum. Coupled with signs of a weakening labor market and a decline in US consumer confidence in December, these factors suggest that the dollar could remain under pressure into early next year, despite some near-term resilience in growth data. The GBP gained ground against the Greenback, while the US Dollar Index (DXY) fell to its lowest level since early October. The index is on track for its steepest annual decline since 2017, reflecting a broader trend away from US Dollar strength as global rate expectations change. Wednesday will be the last significant trading day for GBP/USD this week, as American markets will close early, and European markets will be closed on December 25 and 26. GBP/USD daily chart Pound Sterling FAQs The…
Filed under: News - @ December 23, 2025 10:23 pm