Dollar Traditionally Sold in December: Credit Agricole
- Written by: Gary Howes
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There's scope for further GBP/USD gains as the dollar struggles in December.
Crédit Agricole's FX seasonality analysis shows the dollar has lost ground in approximately 70% of the cases in the past 25 years.
"The month of December has historically been associated with notable USD selling across the board," says Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole.
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Weakness has traditionally been most pronounced against the CHF and SEK while holding it has tended to hold its ground relatively well against the JPY and CAD.
For GBP/USD, the falling USD will inevitably give a lift, provided there are no UK-specific headwinds.
A lift for GBP/USD is possible given the passing of the budget on Wednesday, which delivered no surprises, allowing Uk assets to refind their footing following months of speculation and uncertainty.
Why would the dollar tend to struggline in December?
Crédit Agricole says negative year-end seasonality is linked to:
(1) hedging and repatriation of profits earned on USD-asset holdings by foreign portfolio investors
(2) hedging and profit repatriation by exporters that involves the conversion of USD-denominated revenues into their home currency (given that most global trade is in USD).
Crédit Agricole notes U.S. equity and fixed income markets have attracted record foreign portfolio inflows in 2025 and expect profit repatriation flows to pick up into year-end.
"Furthermore, we expect a notable year-end USD-selling this December due to growing global trade flows in recent months. These flows tend to be negatively correlated with the USD as was evident in Q125 when the frontloading of US exports before the introduction of US tariffs fuelled USD-negative hedging and repatriation flows," says Marinov.
