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GBP/USD hit historic lows in response to the coronavirus crisis, changed its reaction function to printing money and provided endless Brexit-related movements. Looking to 2021, the economic calendar is set for a comeback in influencing cable with Trump, Brexit and eventually coronavirus out of the door, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“After over four years that Brexit headlines had a substantial impact on the pound, traders may feel that the topic is entirely over after a few weeks. Nevertheless, its influence will probably move to economic data rather than via the latest comments from an unnamed EU official. Once the world begins emerging from the covid disaster, Britain could find itself at a competitive disadvantage – a potential downward driver for the pound.”

“The UK is moving faster than other countries in vaccinating its population, and that may be underappreciated by markets. A successful and rapid immunization campaign could send sterling higher in the spring and summer when Britons will likely return to normal life sooner than their counterparts in other parts of the developed world. By the end of 2021, the world will probably return to almost wholly to the new normal, and the virus’ impact on currencies will likely wane.”

“If Democrats pull off a dual victory in the Georgia state, stimulus is set to be generous, pushing the dollar down. However, one Republican victory in Georgia will be enough to limit any extra spending and would set Washington back to a stalemate. That would ultimately fail to provide meaningful support to the US and global economies, boosting the dollar.”

“The US Democratic Party is economically aligned with the UK’s Conservatives. Both support free trade and a dose of welfare. Both countries also have a common interest in halting China’s technological advance and Russian aggression. The special relationship is making a comeback and that could serve as a bullish factor for cable, albeit a minor one.”