GBP/USD: Boris tries to impress markets with a Brexit breakthrough

The pound is unimpressed by looser UK restrictions after losing more than 300 pips from the recent peak amid a mix of gloom from the UK and the US due to Brexit issues and an increase of Covid-19 infections, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“The PM may turn the tide by attempting to reach a Brexit breakthrough. He will have a call with European Commission President Ursula von der Leyen and other top bloc officials. London has insisted it will not ask to extend the current transition period that expires at year-end – with the UK potentially falling to World Trade Organization rules in 2021.”

“People entering the UK from abroad are required to quarantine for 14 days – all but killing tourism and slowing the recovery. On the other side of the pond, increases in COVID-19 infections in nearly half of the states are souring the mood. Daily figures from Florida, Texas, Arizona, and California are watched closely.”

“Larry Kudlow, President Donald Trump's adviser, insisted that the US is opening up and that a V-shaped recovery is at hand. However, markets seem to believe the Federal Reserve's more downbeat assessment of a slow return to pre-pandemic output.”