GBP : Higher after UK Inflation Data

(Wed, 18 Nov 2020). UK inflation figures showed an increase in October and that could help the recent trend higher in GBP/USD continue. The EU-UK talks on their trade relationship after the Brexit implementation period ends on December 31 could reportedly result in an agreement early next week and that is helping GBP too. However, if there is no sign of progress Sterling is likely to give up some of its recent gains.

GBP/USD TREND UPWARDS TO PERSIST

The recent trend higher in GBP/USD could stretch further after news that the UK inflation rate rose to 0.7% in October, above both the previous 0.5% and the 0.6% forecast by economists polled by the news agencies.

The numbers are another positive factor for GBP/USD, which looks likely to hit 1.33 shortly. However, the pair’s fortunes remain tied to the EU-UK negotiations on their relationship once the current Brexit implementation period ends on December 31.

Recent reports suggest that an agreement between the EU and the UK is possible early next week and any deal would also reinforce Sterling’s recent strength. Note, though, that if such a deal is not forthcoming there is now very little time left for the ratification process necessary for an agreement to be implemented – a potential negative for the Pound but positive for the FTSE 100 index of the major London listed stocks, which tend to benefit from GBP weakness.

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