Institution: Pound may struggle to maintain its upward momentum, economic headwinds pose pressure.

Monex Europe analysts pointed out in a report that due to the ongoing potential economic headwinds, the current upward momentum of the pound may quickly lose steam. With a lack of economic data in the UK and many market participants away for the Christmas holidays, the pound's movements are more broadly driven by risk appetite. Looking further ahead, forecasts for 2026 include the Bank of England further loosening policy against a backdrop of a cooling UK economy, which should limit the pound's gains in the new year.