Monthly Update: GBP Vs USD December 2020
by Richard Taylor on Dec 8, 2020
Richard catches up with Mark Ridley, co-founder & Managing Director of GreenShootsFX to take a quick look at the current state of GBP vs USD and review what's on the immediate horizon. GreenShootsFX are a corporate FX payments specialist focused on driving down margins and offering a more efficient way of moving funds internationally.
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So Mark, I can't believe it's only been a month since we last spoke. What a month it has been. Tell us, what does it mean for currency?
It's been super busy. Well Sterling has quietly moved higher against the dollar over the last several weeks. Behind this steady rise of several factors. First it's ahead of the two or three COVID vaccines that are starting to be delivered at the end of November. Within the next couple of weeks, these are expected to be available to the first first line workers. The UK has regulatory approval for both Pfizer and AstraZeneca's vaccines. And this in itself has pushed the equity markets higher. As well as we can the US dollar is investors are breathing a sigh of relief. I'm putting cash to work across the globe. Secondly, it's the same old Brexit saga. The usual hurdles remain, fishing seems to be the high one right now. There is a rumor that a conversation between EC President Ursula Von der Leyen and UK PM Boris Johnson has taken place, nothing confirmed as yet.
Then lastly, there's the technical aspect that is underpinned the Sterling rally. The move has been in a traditional channel where there's been higher highs and higher lows. And the recent high of 134.10 remains below the all important level of 135. Channel support is at 132.50. And below that 131. Any break below 132.50 can lead to a more serious excuse me, a more serious self to probably 129, but this type of weakness will most likely be off the back of a negative Brexit conversation. Most financial firms though, are forecasting a much stronger pound by the end of 2021. So I'm as strong as 144 in fact, but you know, again, these are just our opinions,
144. Wow. Did we just have a conversation that didn't involve talking about the US election and the US president? I mean, amazing.
Yeah, I was thinking of putting that in there, but I was going to say, look, we're through the US presidential election right now, but then thinking about it, we've still got a couple of months to get through.
Yeah. So we'll just fall back on that old conversation piece that has dominated our lives for the last five years, known as Brexit, but it sounds like in general, we know it's a forecast, but in general the consensus seems to be quite positive for GBP.
Yeah, it does. So like the dollar has changed it's long-term trend. So for where it's been trending for the last 10 years, we've now broken through that. That's going to add to the weakness, the amount of debt that the US government has right now, the change of administration. And then we've also got a [inaudible] who wouldn't be opposed to any rate counts as well. And so that's going to continue to provide reasons for the weakness as well.
Okay. All good stuff. All very encouraging for our clients with pounds, which is a lot of them. Great. Okay. Thank you for that, Mark. I'll see you next month. Have a great Christmas.
You too. Happy holidays.
You too Mark. Happy holidays.
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