Cable holds above 1.3500, but conviction looks limited

GBP/USD is still supported at the upper end as markets work through the final trading week of 2025. Price action has stayed on the stronger side of 1.3500, but thin holiday conditions suggest follow-through is likely to be modest in either direction into the year-end close.

Fed minutes the key risk, with cuts debate still unresolved

The UK calendar is light, leaving the pair largely at the mercy of broader USD swings and positioning. Attention turns to the Federal Reserve’s latest minutes on Tuesday, a final read on internal policy debate before the year wraps up.

Markets will look for any softening in tone after a cautious set of rate projections. The Fed delivered the expected 25bp cut, but guidance on the path beyond was interpreted as relatively restrained, while Chair Powell flagged a committee divided on the balance of risks to employment and inflation and content to proceed carefully if policy is near neutral. A separate short-term Treasury purchase programme briefly read as supportive, but broader risk appetite ultimately deteriorated and equities sold off.

Subsequent US jobs and inflation releases were mixed but leaned towards easier policy, and GDP surprised to the upside, complicating the near-term narrative. Pricing still implies a more accommodative profile than the median Fed view, even as expectations for a January move have been pared back sharply. In thin liquidity, any signal in the minutes that policymakers prefer to wait for clearer evidence could weigh on risk sentiment and, by extension, support the dollar into the turn.

Looking ahead

• Tuesday: December FOMC minutes, focus on appetite to pause versus openness to further cuts.

• Rates pricing: watch any repricing of the 2026 path versus the Fed’s projected profile.

• Market conditions: year-end liquidity may amplify moves, especially if risk sentiment turns.