According to Westpac economists, a Brexit deal, which is starting to look imminent, would propel the GBP / USD pair towards the 1.37-1.40 range if one is finally reached, while the EUR / GBP would decline towards 0.88.
Key statements:
“This time it really looks like an agreement will be reached just in time for Christmas. UK and European MPs are reportedly on hold to sit down between Christmas and New Years in order to speed up the deal and make it law in the UK and interim law, which will then be ratified by individual nations, by the EU Parliament. December 24, therefore, seems to be the day the agreement is finalized and detailed ”.
“If a deal is finalized on December 24th, the GBP is likely to make more profit. GBP / USD is likely to move towards a 1.37-1.40 range, but the possibility of a more substantial move towards 1.4500 now seems unlikely given the exhaustion of positions. Similarly, it is likely that the EUR / GBP will slide below 0.9000 towards 0.8800, but a change to 0.8500 also seems unlikely ”.
“However, risks persist. Controversial issues on either side could still derail the negotiations. In addition, once approved by the UK Parliament and the EU Parliament, the EU-27 nations must ratify this and a surprise opposition to the deal could arise and thus create uncertainty about its sustainability and full implementation. . However, those risks now appear to be relatively minor given the focus on the serious economic implications of the current pandemic and its new variants. This should greatly reduce the potential for disturbing opposition. “
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