According to a recent Reuters poll, Brexit uncertainties and the coronavirus pandemic are likely to weaken the Sterling this year, but it could recover the losses and rebound in 2021. GBP/USD has strengthened to near five month highs over the past few sessions, supported by a weakness in the US dollar.

However, the Cable could give back recent gains amid fears of a second wave of coronavirus in Britain – one of the most affected countries, which could hurt the economy even further. The British economy has already been under strain due to Brexit-related concerns, as Britain is yet to finalize a trade deal with the EU.

Economists have forecast that GBP/USD could weaken to 1.29 in a month’s time and drop to 1.28 over the next three months from the current highs around 1.31. However, the pair could come back to present highs within a year.

Britain is yet to strike a trade agreement with the EU which would come into effect at the end of the transition period on December 31, 2020, even though economists maintain hopes that both sides will agree to a free trade deal before the deadline. With time running out, many worry that even if a trade deal is finalized in the coming months, it may not come into effect as soon as Q1 2021.