The UK is due to leave the EU this month. Besides the Brexit, there is another big GBPUSD fundamental mover for 2020. HYCM’s Chief Currency Analyst has provided his analysis in regards to GBP this year.
09 January, 2020 | HYCM – The count down to the anticipated Brexit on the 31st of January 2020 has begun. Many traders are bracing up for GPBUSD volatility. The decline of the Great British Pound (GBP) has been continuing since the UK elections. Together with the tensions over UK trade deal, the GBP’s direction for this year is one that many traders are keeping an eye on.
Meanwhile, ESMA already signed agreements with the Bank of England (BOE) ahead of the Brexit. ESMA Brexit agreements with BOE includes the recognition of three CCPs: LCH Limited, ICE Clear Europe Limited and LME Clear Limited. Furthermore, the British clearing houses were also relieved.
Can the UK Meet the Deadline for the EU-UK Trade Deal?
Besides the Brexit, the UK has time until December 2020 to arrange a Brexit trade deal with the EU. Many analysts are skeptical over the UK’s government and don’t believe that they can come to a trade deal with the EU in less than a year’s time. Since such trade deals took multiple years by other countries that signed a deal with the EU.
A loophole in this entire case is that the deadline for the Brexit trade deal can be extended, and this sure sounds familiar with the Brexit deadline been extended two times already. However, according to UK Prime Minister Boris Johnson, the UK will not need to ask for an extension of the EU-UK trade deal. Hence, many consider it as a race against the clock, with a big impact on the GBP.
The Biggest Fundamental Mover for GBP in 2020
Notwithstanding, the biggest fundamental mover for the GBP in 2020 is the EU-UK trade deal. So think twice, if you thought that the GBP would become more stable after the Brexit will occur on the 31st of January. However, if the UK government is able to strike a successful EU-UK trade deal by December 2020, then I expect it will result in strong GBP bids. Have a look at the BBC infogram chart below, and just notice the many options available for the UK and EU to seal the EU UK trade deal.
Do you agree that the UK EU trade deal will be the biggest fundamental mover for GBPUSD this year? You can benefit from the GBPUSD volatility and open a trading account with HYCM.