GBP/USD has hit new highs as optimism about an upcoming vaccine in the UK and a smooth US transition outweighed Brexit uncertainty and upbeat US data. Brexit, Powell and Nonfarm Payrolls promise a hectic start to December, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Deal or no deal? The eternal question may be finally answered as the page turns to December. Markets are not fully pricing a deal, leaving sterling room to move higher. However, the risk is asymmetric, with an unexpected collapse in negotiations probably triggering a massive sell-off. A meeting between PM Johnson and European Commission President Ursula von der Leyen could seal an accord, and even setting such a summit would probably boost the pound.”
“Health Secretary Matt Hancock mentioned December 1 as the potential beginning of a wide vaccination campaign. While that goal will likely be missed, regulatory approval of any immunization scheme would likely support sterling. COVID-19 statistics remain of high interest, especially those in London, one of the world's financial capitals. Restrictions in the metropolis have an outsized impact on the pound.”
“How high will US covid statistics go? Investors will likely take note if average daily deaths surpass the previous peak or if hospitalizations top 100,000. President-elect Biden will likely address the topic and any hint of a federal action to curb the spread could hurt markets and boost the safe-haven dollar.”
“On the vaccine front, there is a chance that the Food and Drugs Administration approves the Pfizer/BioNTech immunization for emergency use. While such a move is expected, it would likely provide a shot in the arm to markets and weigh on the safe-haven dollar.”
“Jerome Powell, Chairman of the Federal Reserve, will testify on Capitol Hill on Tuesday. Markets will try to assess if the Fed is on course to expand its bond-buying program in December or remain on the sidelines for longer. The dollar could drop if he hints at an imminent move and rises if Powell is reluctant to act.”
“Friday's Nonfarm Payrolls figures for November serve as a test to the recovery. Is it slowing down amid the increase in the virus, or does the US economy still have momentum? Expectations stand at 520,000 – which is slower than October's rise of 638,000 but well above pre-pandemic averages.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.