The British pound finished in third place, and the late selling is worth mentioning. The clock is ticking as the Brexit transition period ends one month later. In the coming days, there may be a sharp movement of the pound sterling, in particular against other large European currencies.
The pound sterling may be subject to high volatility in the coming days, as talks with the EU Michelle is now in London for four days of Brexit talks. A month before the end of the transition period, a significant gap remains between the UK and the EU. In any case, the announcement of the deal or its rejection will trigger further movements in the pound.
Inflation could rise more than expected in hopes of a faster economic recovery fueled by progress in the development of a coronavirus vaccine and massive stimulus, Bank of England (BOE) chief economist Haldane said in a speech at the University College London webinar on Saturday.
GBP/USD is cutting monthly gains, declining last week to retest 1.3300. The pair awaits the Asian session’s reaction to the latest Brexit and COVID vaccine news on Monday. While the general weakness in the US dollar and hopes for a coronavirus (COVID-19) vaccine largely spurred Cable in November, bulls are starting to wary of late due to Brexit uncertainty.
GBP/USD rally from 1.2675 last week extended to 1.3397 but has retreated since then. The initial bias is neutral this week. On gains above 1.3397, the pair will target the 1.3482 high. A decisive break of the 1.3482 high will resume all gains from 1.1409.
Further rally to 61.8% of the 1.1409 forecasts to 1.3482 from 1.2675 to 1.3956 further should then be seen. On the other hand, a break of 1.3195 support will reverse the bias back down to continue consolidation from 1.3482 with another falling leg.
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