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Peak in coronavirus cases and hopes for at least a staged post-Brexit trade deal are pushing GBP/USD towards 1.37. Nonetheless, failure in trade talks could still flip the cable below 1.30, economists at Westpac apprise.

Key quotes

“The factors influencing GBP in the near-term are the clear signs of COVID-19 cases having peaked and the progress in EU/UK trade talks. The daily Covid case count has pulled back to a still high 18,213 on 25th Nov from over 30K earlier in November and the R-rate is back to 1, indicating that the lockdown will be relaxed on December 2, but still with tight and tiered restrictions.” 

“Of critical importance is the state of EU/UK post-Brexit trade talks. Face-to-face talks are now resuming and hopes remain that at least a staged deal can be struck in advance of EC’s 10-11 Dec Summit. A deal could still flip GBP/USD into the 1.37-1.40 area. However, the next two weeks remain critical.” 

 

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