GBP : Breakout Imminent

(Tue, 1 Dec 2020). There’s still no Brexit deal, but one is expected to be reached very shortly. The UK has signaled that it could simply be a matter of fisheries from the EU’s perspective. Regardless, the situation appears to be on track to avoid the worst case ‘hard Brexit’ scenarios. Stories and comments regarding a potential Scottish independence vote appear to being ignored at present (although in the medium-term, may come back to haunt Sterling).

BREXIT NEWS STILL ISN’T NEWS

GBP-crosses have shrugged off any indecent news, suggesting that underlying demand remains strong. All three major GBP-crosses (EUR/GBP, GBP/JPY, and GBP/USD) retain potential for further British Pound strength in the near-term, in a ‘buy the rumor, sell the news’ type of environment around a formal Brexit deal.

That is, from this strategist’s point of a view, it seems likely that the British Pound will rally around any deal announcement before profit taking quickly emerges, capping any significant, sustained rally move higher. Other risks linger around the corner, and the coronavirus pandemic’s economic destruction will make Brexit – in any form – all the more difficult.

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