GBP/USD Bulls Hungry For Gains Ahead Of Brexit Dinner

Striking a deal at dinner? That is the hope of sterling bulls as UK Prime Minister Boris Johnson heads to an evening encounter with European Commission President Ursula von der Leyen. The two leaders spoke on the phone several times in recent days but have failed to reach a compromise on the issues remaining to conclude post-Brexit relations – fisheries, governance, and the level-playing field.

Sterling edged up on Tuesday after Britain dropped controversial clauses in the Internal Markets Bill (IMB). The concession allowed both sides to announce a protocol for Northern Ireland – yet that only completes the implementation of the 2019 Withdrawl Agreement – not trade details from 2021 onward.

The transition period expires in 22 days and without a deal, Briain reverts to unfavorable World Trade Organization rules. Michel Barnier, Brussels’ Chief Negotiator, said that the chances of a deal are “very slim.” If he is right, sterling could dive once dinner is over. On the other hand, the leaders may cede ground and allow for a breakthrough.

As long as Johnson travels to the Belgian capital, there is hope – and that should keep sterling bid. 

Outside the neverending Brexit saga, the safe-haven dollar is on the back foot as Republicans and Democrats seem to be inching closer to a fiscal stimulus accord. The GOP seems ready to accept a $900 billion relief package, yet the parties differ on the details. Headlines from Washington are eyed.

The UK is reportedly on course to approve the AstraZeneca/University of Oxford coronavirus vaccine after a peer-reviewed analysis showed it is 70% efficient. The move comes after Britain began administering the Pfizer/BIoNTech jab on Tuesday. The US Food and Drugs Administration is set to give its nod on Thursday.

Worries about the covid’s spread in London may weigh on the pound once the Brexit dust settles. Concerns that the capital could enter Tier 3 restrictions are in the air.

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