The Bank of England may implement another round of monetary policy easing in 2025, following the Federal Reserve's lead. However, this will mark the fourth rate cut for the BoE this year (the FOMC has reduced rates three times). It is worth noting that at the beginning of the year, Andrew Bailey repeatedly stated that the central bank planned four rate cuts, so there is little left to fulfill this "plan."

The British central bank could have cut rates at its last meeting in early November. However, the "hawks" prevailed in the vote, 5-4. Market participants expected more "hawks" to vote on the MPC, so immediately after the November meeting, expectations of a December rate decrease rose to nearly 100%. The latest inflation reports bolstered market confidence in the BoE's "dovish" decision. It is important to remember that implementing monetary policy easing amid rising inflation would be pure suicide, as inflation would accelerate even faster. However, the consumer price index initially stabilized at 3.8% and subsequently slowed to 3.6% by the end of November. This decline reassured the market about a potential rate cut in December.

Should the British pound be concerned about next week? Yes, but not only because of the BoE's meeting and the possible "dovish" decision. U.S. reports on the labor market, inflation, and unemployment could easily bolster the dollar. Regarding the BoE's meeting, as with the Fed, it would not be surprising to see the BoE cut rates. Therefore, I do not expect a significant drop in demand for the British pound, and I will pay closer attention to U.S. economic data.

Next year, the BoE plans to conduct two more rounds of policy easing, more than the Fed's current plans. Consequently, the U.S. currency will have a slight advantage over the pound next year. However, it is essential to remember that these are only current plans, and the Fed continues to navigate through an "information fog." More or less accurate forecasts of U.S. rates in 2026 can only be made after the release of relevant data on the labor market, unemployment, and inflation. For now, making assumptions is akin to reading tea leaves.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend segment. Trump's policies and the Fed's monetary policy remain significant factors for the long-term decline of the U.S. dollar. The targets of the current trend segment may stretch up to the 25th figure. The current upward wave formation is beginning to gain traction, and I hope we are witnessing the formation of an impulse wave structure within global wave 5. Thus, we should expect growth to continue right up to the 25th figure, as I mentioned earlier.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has changed. We continue to deal with an upward impulse trend segment, but its internal wave structure has become complex. The downward correction structure a-b-c-d-e in C of 4 shows a completed look, as does the entire wave 4. If this is indeed the case, I expect the main trend segment to resume its construction with initial targets around the 38th and 40th figures.

In the short term, I expected wave 3 or c to form, with targets around 1.3280 and 1.3360, which correspond to the 76.4% and 61.8% Fibonacci levels. These targets have been reached. Wave 3 or c continues its formation, and the current wave set is beginning to take on an impulsive appearance. Therefore, one can expect continued price increases with targets around 1.3580 and 1.3630.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often involve changes.
2. If there is uncertainty about what is happening in the market, it is better not to enter.
3. There can never be 100% certainty in the direction of movement. Always remember to use protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.