- GBP/USD tests resistance close to the 1.34 ahead of UK Chancellor of the Exchequer Rishi Sunak’s spending review & economic and fiscal forecasts.
- Brexit remains a key factor too as Brexit in Name Only – becomes the more likely outcomes.
GBP/USD UPTREND SET TO CONTINUE
GBP/USD edges higher to resistance at1.34. The key event is Thursday’s spending review – essentially a mini budget.
The review itself is not expected to move the markets. UK Chancellor of the Exchequer Rishi Sunak is expected to announce a squeeze on public sector pay outside the health sector. More importantly will be the forecasts for the economy and the public finances from the Office for Budget Responsibility.
BREXIT BARE-BONES DEAL STILL LIKELY
Looking further ahead, Brexit trade talks will be a key theme Brexit in name only – is shaping up to be one of the more likely outcomes. Any deal could see some profit-taking after the currency’s recent rally.
Market optimism could also lift the Pound. The mood improves in hopes of a smooth transition from Donald Trump’s presidency to Joe Biden’s team. Coronavirus vaccine hopes and supportive central bank policies are also underpinning the currency, in addition to Janet Yellen being named as the next US Treasury Secretary, a market friendly choice.