GBP/USD: There is room for a Brexit deal rally

GBP/USD has been marching higher in hopes of a Brexit deal. Vaccine news is to continue competing with covid statistics in a new week set to be dominated mostly by Brexit once again. The Federal Reserve's minutes, updated US growth figures and forward-looking UK surveys will be also eyed, FXStreet’s Analyst Yohay Elam reports. 

Key quotes

“While the Brexit talks' collapse would undoubtedly send sterling down, will investors ‘buy the rumor, sell the fact’ in response to a deal? The recent market sensitivity shows that an agreement is far from being priced, leaving room for the pound to rally.”

“The current shuttering expires on December 2. The PM is likely to postpone any decision to the last minute, and coronavirus statistics could guide markets ahead of the next moves. If infections begin declining more substantially, there is room for easing and a rise in the pound. If Britain continues struggling to contain the disease, the pound could suffer.” 

“A speech from Andy Haldane, the BoE's Chief Economist, and an economic update from the government may also move markets. However, the bank and Westminster already delivered the coordinated boost early in the month – announcing additional bond-buying and an extension of the furlough scheme, respectively. Both institutions will probably wait until making new steps.”

“Coronavirus statistics, and ensuing restrictions, will likely stand out in America's short trading week. After surpassing the 250,000 mortality mark, investors could focus on daily deaths, with the grim prospects surpass the peak in the spring. Full lockdowns are also on the cards. Governors' decisions in the four largest states: California, Texas, Florida and New York, are set to have the most significant impact on markets.” 

“An update on third-quarter growth is set to confirm a robust expansion after a devastating second quarter. Investors will likely look to the more up-to-date Durable Goods Orders statistic for October, which carries expectations of more modest increases in investment.”

“The Federal Reserve's Meeting Minutes from the early November decision could shed light on the bank's bond-buying intentions. If most members seem concerned and ready to act, the dollar could fall. Otherwise, the safe-haven greenback could attract buyers. The bank has been urging lawmakers to act, yet to no avail.”