GBP : Hard Year for Sterling

(Sun, 20 Dec 2020). One of the most liquid trading pairs, GBP/USD is closing the final quarter of the year on the front foot with gains of over 4%. EU-UK trade negotiations are going down to the wire with an outcome not known at the time of this analysis, though, the expectation is that a thin deal will be announced. That said, in such a scenario, reduced political headwinds in the short run for GBP/USD, alongside a softer USD environment may well further initial gains towards 1.3700. However, as optimism rises that a deal can be reached, there is always the risk of a “buy the rumour, sell the fact” response (this same dichotomous response played out after the 2019 General Election).

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