GBP : Heading to 1.34

(Tue, 24 Nov 2020). Optimism that European Commission President Ursula von der Leyen and UK Prime Minister Boris Johnson can push through an EU-UK trade deal before the Brexit implementation period ends on December 31 is boosting Sterling even though only a bare-bones agreement is expected.

That will likely push GBP/USD above the 1.34 level, where “round number” resistance halted its progress Monday, when the day’s high was at 1.3398. A sustained breach of 1.34 would then likely see the price rise towards the 1.3483 level touched on September 1 before the exchange rate fell back.

Much though will depend on the positive mood in the markets generally continuing. For now, sentiment is constructive after US President Donald Trump cleared the way for a Joe Biden presidency, vaccine hopes persist and Monday’s UK purchasing managers’ indexes for November beat expectations.

Looking ahead, Wednesday’s spending review by UK Chancellor of the Exchequer Rishi Sunak and the accompanying economic and fiscal forecasts are the next major events on the calendar but should have little impact on GBP/USD and the GBP crosses.

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