EUR / USD could move towards 1.20 on Brexit-related developments – Westpac

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EUR / USD remains within a range of 1.15-1.20, depending on the rise or fall in the COVID-19 case count, Westpac analysts say. They estimate that a positive evolution in Brexit could push the common currency to the upper half of its range.

Key statements:

“The increase in COVID-19 cases in the Eurozone countries is increasing the risks of tighter restrictions and therefore more economic costs and fiscal strains. The most recent regional services sector PMIs showed a decline to contraction, especially in Spain, and this week’s ZEW surveys showed a shift in expectations, certainly after a rebound to all-time highs, due to the effects of the sustained outbreak of COVID-19. Next month will be of vital importance in determining whether infections stagnate or if Europe faces a harsh economic winter. ”

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“The current agenda of the EC Summit (15-16 October) is set to discuss the progress of the COVID-19 health measures and then the Brexit negotiations between the EU and the UK. The fragility of the regional recovery means that a further shock from a disorderly imposition of trade tariffs and restrictions on UK products is likely to intensify the EC debate about finding any compromise with the UK that is politically acceptable, given that the UK is the EU-27’s third largest trading partner (after the US and China). ”

“EUR / USD is likely to remain within its recent 1.15-1.20 range unless Brexit progresses or COVID-19 counts accelerate or decline.“.

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Credits: Forex Street

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