Published: 22 December 2025,00:54
Daily Market Analysis New
Key Takeaways:
*BoE cuts benchmark rate by 25bps to 3.75%, fourth reduction this year.
*Concerns over wage growth and structural inflation suggest further cuts may be limited.
*GBP/USD consolidates as the market awaits the UK GDP report.
Market Summary:
GBP/USD traded lower following the Bank of England’s surprise 25 basis-point rate cut to 3.75%, the fourth reduction in 2025. The central bank’s nine-member Monetary Policy Committee voted 5-4, signaling caution over the pace of further monetary easing. While the move aligns with market expectations for lower borrowing costs, some policymakers highlighted ongoing concerns over structural inflation pressures and persistently high wage growth, suggesting that additional cuts may be less forthcoming.
Despite the rate reduction, the pound remained broadly resilient, consolidating near technical resistance levels as investors weighed the broader economic backdrop. Market participants have priced in the BoE’s actions, with attention shifting to the upcoming UK GDP report, which is expected to provide a clearer signal on the strength of the economy ahead of the holiday season.
Overall, while the rate cut provides short-term relief for borrowers, uncertainties surrounding wage pressures and inflationary trends could limit further downside for the pound. Traders remain cautious, balancing the need for policy support with the risks of overtly aggressive monetary easing.
Technical Analysis
GBP/USD, H4
GBP/USD is trading lower following a retracement from the 1.3430 resistance level. Short-term technical indicators point to a consolidation phase, with momentum fading and no clear directional bias. The MACD shows waning momentum, while the RSI hovers near 51, close to the midline, reinforcing the likelihood of range-bound movement.
As long as the pair remains between 1.3315 and 1.3430, traders may expect sideways action. A breakout above 1.3430 could signal a resumption of bullish momentum toward 1.3530, while a breakdown below 1.3315 may open the path toward 1.3200.
Resistance Levels: 1.3430, 1.3530
Support Levels: 1.3315, 1.3200
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