Published: 15 December 2025,06:20
Daily Market Analysis New
Key Takeaways:
*GBP rebounds toward 1.3400 as a weaker USD and stronger-than-expected UK PMI data ease stagflation fears after recent underperformance.
*Markets price in a meaningful chance of a rate cut, but persistent inflation complicates the decision.
*A soft print would reinforce dovish expectations and pressure GBP, while a firm reading would support Sterling via a restrictive BoE stance.
Market Summary:
The British Pound has demonstrated resilience against a broadly weakening U.S. dollar, propelling GBP/USD toward the 1.3400 level—its highest point in a month. This firmness comes after a period of pronounced underperformance, where the currency was pressured by a confluence of fiscal and economic concerns. Market apprehension centered on the UK’s Autumn Budget, which introduced tax hikes seen as a potential drag on growth, compounding existing fears of a “stagflation” scenario marked by persistent inflation and economic stagnation.
Sentiment found a tentative floor following the release of stronger-than-expected UK PMI data, which suggested the underlying economic activity may be more robust than previously feared, providing the currency with a catalyst for a near-term rebound.
The focus now shifts decisively to the upcoming Bank of England monetary policy decision on Thursday. Market pricing indicates a significant probability of a rate cut, driven by a desire to narrow the policy gap with other major central banks and to provide economic stimulus. However, the persistent threat of stagflation presents a complex dilemma for the Monetary Policy Committee, potentially staying in their hand.
Wednesday’s Consumer Price Index (CPI) report will serve as the primary determinant for near-term direction and BoE expectations. A soft inflation reading would likely solidify market bets on a dovish pivot from the BoE, potentially weighing on Sterling. Conversely, a stronger-than-anticipated CPI print would bolster the case for the Bank to maintain a restrictive stance, which could provide substantial support for the Pound.
Technical Analysis
The GBPNZD pair has executed a decisive technical breakout, moving above its recent consolidation range following a decline from the near-term peak at 2.3551. This suggests that the period of equilibrium has resolved in favor of the bulls, indicating a potential trend reversal may now be underway.
The successful breach of the range-bound resistance invalidates the immediate bearish structure and establishes a new foundation for potential near-term appreciation. For the reversal to be considered valid, the pair must now sustain a daily close above the former range high, converting this level into support.
Momentum indicators substantiate the shift in market dynamics. The Relative Strength Index (RSI) has rebounded from oversold territory and is trending higher, reflecting a return of buying pressure. Concurrently, the Moving Average Convergence Divergence (MACD) is exhibiting a bullish pattern of higher highs and is approaching a crossover above its zero line, confirming that bearish momentum has dissipated and a new bullish cycle is forming.
Resistance level: 2.3250, 2.3385
Support level: 2.3000, 2.2880
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