GBP/USD ripe for 1.45
GBP/USD ripe for 1.45
1.45 is a very specific target for GBP/USD. However, it’s a significant target as that’s where the Pound was before the Brexit referendum. Now the Brexit deal is done, what will push it back to that level again?
GBP/USD catalyst halfway there
It is clear that the damage that the Coronavirus has done continues to weigh on the pound. With lockdowns in the UK holding through Christmas and New Years, and continuing into the new year, optimism in the UK economy is at an all-time low.
However, with daily Coronavirus cases dropping 25% from the last week, there is some signs of the UK pulling out of their current situation. With that said, hospital beds are still near the brink of overcapacity, alongside deaths continuing to record over a thousand deaths a day.
GBP/USD now focused on the UK economy
Another factor weighing on the cable is the forward-looking guidance the Bank of England gives on interest rates. Specifically, whether they will bring the rate into negative territory.
However, after Governor Bailey’s speech earlier this week, the market has pushed back on hopes that the current interest rate of 0.1% going into negative territory. However, analysts predict a rate cut from 0.1% as soon as next month. Goldman Sachs strategists predict that there could be a rate move to 0% soon, placing those odds at 4 to 1.
Valentin Marinov, head of Group-of-10 FX research and strategy at Credit Agricole SA stated that “The pound is regaining ground as rates markets are pairing back rate cut bets ahead of the February policy meeting..”. However, he also added that “any rebounds in the GBP represent a selling opportunity at current levels.”
The catalyst for the Pound is relatively clear: A dire Coronavirus situation getting much, much better alongside interest rates holding steady.
What are your predictions for the pound?
Four years have passed, and now we usher in a new United States President: Joe Biden. A complete U-turn from what Donald Trump stood for. Nationalism is now replaced with Progressive politics. The question arises, how will President Joe Biden’s 100-day agenda affect the markets?
Stocks coming into 2021 – Boom or Bust?
Here are two fun facts from equities in 2020.
· The NASDAQ returned 46% from the start of 2020. If you purchased at the peak of the recessionary period in mid-March, you would’ve made a return on investment of 85%.
· Meanwhile, the S&P500 only returned 17% from the start of 2020.
· The average price/earnings ratio for stocks in the NASDAQ was pushing 23
· The best performing stock that is in the S&P 500 and NASDAQ was Tesla, providing a 743% Return.
With that in mind, what are we expecting for stocks coming into 2021?
The Dollar has been experiencing some love coning into the new year, with the DXY up just under 1%. However, is this just a technical rebound, or is there substance for a further rally?
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