Sterling has gained this week, pushed up by a broadly weaker US dollar, as uncertainty over Brexit and Britain’s economic prospects kept most investors on the sidelines. Britain has been pursuing a number of trade deals with countries like Japan, Australia, US etc. following little progress with the European Union, but most analyst doubt any deal can be signed off before the end of the year, when the transition Brexit period ends.
Having failed to curb new COVID-19 infections at the start of the pandemic, the government and the central bank have injected an unprecedented amount of money to keep the economy afloat and prevent a massive wave of unemployment.
The pound has recovered to its pre-pandemic levels and having broken through an earlier resistance last week, now seems on track to reach a 6-months peak of 1.321 touched in January. Nevertheless, RSI is showing high overbought levels indicating that the climb might be less certain that many would hope.