Cable’s push into 1.37 is beginning to look a bit overdone. A weak USD is hard to lean against but economists at TD Securities think much of the Brexit news is now in the price, with GBP/USD upside likely a fade until a more sustainable trend emerges later this year.
Key quotes
“This year will very much be a year of transition for the UK, but we do not see finally crossing the finish line in Brexit as a game-changer for the currency. A deal was in the price and the specifics are unlikely to have any bearing on the direction of markets from here.”
“While GBP is very cheap across many of our valuation models and much of the negotiation-linked uncertainty can fade, there is still significant economic underperformance and disruptions to follow early in 2021.”
“Overall USD weakness may be able to help cable drift higher through the year, but our current forecasts do not see GBP/USD sustaining gains higher than current levels until the second half of 2021.”
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