- GBP / USD near the day’s lows around 1.3450.
- The “sell-out” reaction to last week’s announcement of the deal has continued into the last week of operations of the year.
It has been a difficult day for the British pound, with the GBP/USD dropping more than 0.6% around 1.3450, having previously traded above 1.3550 during Monday’s Asia Pacific trade. The pair is down more than 80 pips on the day, with the strength of the US dollar that saw the dollar index rise from lows of 90.00 to 90.30 and the strength of the euro that saw the EUR / GBP rise to around 90.80 from below. of 90.00 weighing on GBP.
Sterling consolidates at lows
GBP / USD has been moving sideways for the most part in recent trading around 1.3450 as traders ponder what’s next for the pair. The bulls will have been disappointed with the reaction in recent days to the announcement of the Brexit deal, which ended up being more of a “sell the deal” reaction than confirmation of a deal rally. Clearly, since the traders had time to explore the details of the deal, they didn’t like what they saw much;
Furthermore, the attempt to see how the transition from being in the EU single market (as the UK is currently is) to the new trade agreement (how severe the disruptions are at the ports, etc.) will likely keep GBP bulls on the sidelines. The above factors, combined perhaps with an element of squaring the post-trade position (i.e. making a profit on long positions) appears to have weighed.
It cannot be ruled out that the pessimism of Covid-19 is also weighing on; there are a lot of UK political rumors at the moment about keeping schools closed in January and possibly reverting to March-style closures (ie tighter than November closure) to contain the escalating cases; new infections topped 40,000 for the first time on Monday and the rise in Covid-19 cases coincides with the usual pressures from Covid-19 that often put pressure on the NHS at this time of year.
But on the optimistic side, the UK could announce regulatory approval for the AstraZeneca / Oxford University vaccine in a few days, which is being hailed as a game changer in the fight against the pandemic given the lower cost of the vaccine. vaccine and increased ease of distribution (it can be stored for a long period of time at normal refrigeration temperatures, which could drastically speed up the UK vaccination program, which is already ahead of the curve, which has already affected more 700,000 people.
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