Potential woes for GBP/USD

Published Sun, Oct 18, 2020 · 09:50 PM

AS we approach the last quarter of 2020, markets will be monitoring the Brexit process and the US presidential elections that will be held in November 2020. Central banks such as the European Central Bank (ECB) have expanded the size of their purchase programmes in a bid to stimulate an economy reeling from the devastating effects of the novel coronavirus that has left national airline carriers in tatters, and massive lay-offs in various sectors.

This has in turn led to fluctuations in the foreign exchange market, especially in sterling (GBP/USD). These include the long-drawn Brexit negotiation process, and British Prime Minister Boris Johnson imposing additional restrictions (working from home, early closures of bars and pubs) to stave off a second Covid-19 wave. The restrictions could last six months. Furthermore, banks like JP Morgan are preparing to shift around US$235 billion in assets from United Kingdom to Frankfurt. This paints a potentiall…