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December 18, 2025

GBP/USD Edges Higher After Softer US CPI; BTC Sees Modest Rally on Fed Repricing

Market snapshot: CPI, BoE and risk-on flows

US November headline CPI surprised to the downside at 2.7% year-on-year (from 3.0%), with core at 2.6%. The BLS noted data collection was affected by a 43-day US government shutdown, adding potential for future revisions. The softer print knocked US yields slightly lower (US 10Y ~4.12%) and lifted risk assets — Nasdaq futures +1.15% and BTC moving above $88,000. In the UK the Bank of England delivered a closely split 25bp cut to 3.75% (5–4 vote) and signalled that further easing is a closer call.

Why this matters for GBP/USD

Macro drivers

The weaker CPI reduces near-term Fed tightening odds: CME FedWatch now prices roughly a 73% chance of the Fed holding in January. A softer USD environment creates scope for GBP appreciation, especially given the BoE’s cautious tone that has tempered aggressive market cut bets. See broader dollar weakness in our coverage of EUR/USD moves: dollar weakness. Goldman Sachs’ forecasts for BoE cuts being pushed into 2026 create a complex backdrop where sterling can benefit from relative repricing if the Fed turns dovish.

Technical picture and levels to watch

GBP/USD traded around 1.3410 (+0.28%) with an intraday low near 1.3340. Key technical considerations:

  • A break and close below 1.3400 would expose the 100- and 200-day SMAs (~1.3361 / 1.3347) and could open a move toward 1.3300.
  • On the upside, reclaiming 1.3460–1.3500 would clear resistance and leave further upside toward 1.3600 in play.
  • Given the narrow BoE vote and noisy macro calendar (US PCE, University of Michigan sentiment, UK retail sales), traders should be alert for whipsaw moves.

BTC reaction and crypto context

Crypto priced in the lower-for-longer Fed outlook: BTC rose modestly (+0.5%) to trade above $88,000 after the CPI release (BTC macro rally). However, intraday crypto breadth was mixed: global crypto market cap dipped to around $2.91T earlier in the session, while SOL and some old alts showed pronounced weakness. Short-term BTC resistance sits near $90,000 with support around $85,000; a failure to hold $85k could invite deeper retracements.

Risks to the current setup

  • Revisions to CPI or a stronger-than-expected PCE print would revive USD strength and could quickly reverse GBP/USD gains.
  • Market repricing toward earlier or larger BoE cuts would weigh on sterling.
  • In crypto, concentrated selling or a break of critical BTC support could produce rapid downside; see technical scenarios such as a BTC wedge break if key levels fail to hold.

Opportunities and trade ideas

  • Tactical long GBP/USD on dips above 1.3360 with a tight stop below 1.3340; target initial resistance at 1.3460–1.3500. Keep position size conservative given policy uncertainty.
  • For crypto traders, buy BTC only on confirmed holds of $85k support and use defined risk (stop-loss) to manage volatility.
  • Consider options or short-term momentum strategies around the BoJ decision and upcoming US data to exploit elevated volatility.

Practical execution and risk management

Retail traders should combine macro signals, technical triggers and disciplined position sizing. Automated trade execution and backtesting can help enforce rules—especially when markets move quickly after macro prints. Tools such as a Trade Assistant Bot or a Bitcoin Trading Bot for crypto exposures can assist with consistent order execution, trailing stops and risk limit enforcement.

Checklist before entering a trade

  • Confirm macro context (CPI/PCE, central bank guidance).
  • Validate technical entry and stop levels.
  • Size positions so a stop-out matches your risk tolerance.
  • Monitor correlated markets (US yields, equities, other FX pairs).

Conclusion

The softer US CPI and the BoE’s narrowly split cut have created a nuanced environment: GBP/USD has room to rally if the USD continues to weaken, but data revisions and further central bank statements can quickly change the picture. BTC’s modest move higher reflects the same market repricing toward lower near-term Fed tightening odds, though crypto-specific liquidity and derivatives conditions add extra volatility risk. For retail traders, disciplined execution and automated risk management are essential tools.

If you trade forex or crypto frequently, consider systems that automate rules-based entry, exits and risk controls. Explore the Trade Assistant Bot and integrate it with execution platforms to reduce emotional decision-making.