GBP/USD to Experience High Volatility Till End of 2020: Reuters Poll

Economists polled by Reuters recently anticipate that GBP/USD could experience significant volatility until the end of the year on the back

Arslan Butt•Friday, December 4, 2020•1 min read

GBP/USD to Experience High Volatility Till End of 2020: Reuters Poll

Economists polled by Reuters recently anticipate that GBP/USD could experience significant volatility until the end of the year on the back of ongoing uncertainties about the EU-UK trade deal. With the end of the Brexit transition period only a few weeks away, and both sides having failed to agree to a trade deal yet, the Sterling is set to experience significant moves as negotiations drag on.

According to the poll, GBP/USD could trade in a range between 1.31 and 1.36 through December, even as diplomats indicate that a trade deal could get finalized by this weekend. While most economists expect the EU and the UK to agree to a free trade deal, a no-deal Brexit could drive significant weakness in the pair.

If the deal does get finalized by the end of this year, the Sterling could strengthen to 1.39 within a year against the US dollar and trade at around 89p against the Euro. The expectations for the GBP have been revised higher in this month’s poll – last month’s poll had economists forecasting the currency to strengthen to 1.35 against the USD.

The recent vaccine optimism has driven weakness in the US dollar and could prove especially beneficial to the GBP if Britain gets a trade with the EU before the Brexit deadline. In addition to the optimism around Britain rolling out the vaccine starting next week, a Brexit trade deal could boost investor confidence significantly in the UK and its currency.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.