GBP/USD: MARKET EXPECTATIONS AND RECOMMENDATIONS

22 December 2020, 13:05
Yuri Papshev
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The pound gained support after the publication on Tuesday morning of the final estimate of the UK GDP for the 3rd quarter. GDP growth in the third quarter of 2020 amounted to 16.0% against the forecast of +15.5% and a fall of -19.8% in the previous quarter. On an annualized basis, the indicator was -8.6% against the forecast of -9.6% and -21.5% in the 2nd quarter.
At the same time, the volume of commercial investments in the 3rd quarter amounted to 9.4% (against a fall of -26.5% in the previous quarter and +8.8% according to the forecast).

However, the GBP / USD is lower on Tuesday, trading near 1.3390 as of this writing, 75 pips below today's opening price (see Technical Analysis and Trading Tips).


In less than two weeks, the post-Brexit transition will end, which means the end of trade agreements between the UK and the European Union. Trade negotiations between the UK and the EU are still at a standstill, and European countries are suspending transport links with the UK over the discovery of a new strain of coronavirus in the country.
In the absence of an agreement, trade between the EU and the UK will be regulated by the rules of the World Trade Organization, which from January next year will lead to the introduction of tariffs on some goods.
Economists believe that the absence of a trade agreement between the UK and the European Union will lead to the fall of the British pound to parity with the euro, and 10% against the dollar.

In general, the positive dynamics of GBP / USD remains, supported by the weakness of the dollar.

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