EUR / GBP continues to consolidate around 0.9080 as traders reflect on what’s next for 2021

• EUR / GBP continues to trade sideways on either side of 0.9080 as trading calms towards the end of the year.
• Brexit, international trade and investment deals, Covid-19 shutdowns and the launch of vaccines will likely propel the pair in 2021.

He EUR/GBP it has deviated or at least been trapped between the relatively thin parameters of 0.9060-0.9090, for most of the last 24 hours.

Trading has been choppy in other parts of the currency markets (the USD in particular has seen some pretty decent swings in sentiment), but with Brexit out of the way and many European participants still absent for the Christmas holidays and New Years, EUR / GBP trading seems to have died immediately.

Traders take a breath and reflect on the themes to come in 2021 …

As the price action calms down, traders will take the opportunity to consider some of the issues that are likely to drive the EUR / GBP price action in early 2021.

First of all, Brexit is still on the market’s mind; It looks like the deal agreed last week will face no setbacks as it was (initially) authorized by EU leaders and the UK Parliament on Wednesday. Even staunch Eurosceptic conservatives have indicated their support for the deal, which is consistent with UK sovereignty according to the European Research Group. The danger could occur in January, when the EU parliament gets a chance to vote on the deal. But amid the chaos of the Covid-19 lockdowns, the incentive not to add more uncertainties reduces the risk that the EU will reject the deal.

But even when the agreement becomes law on both sides of the English Channel, that is not the end of the negotiations; There is still no agreement on services, no data, and no Gibraltar. Everything will need to be addressed and developments will be worth watching, although they will probably fade into the background when it comes to EUR / GBP.

Second, the Covid-19 pandemic continues to sweep across the continent; In the UK, the British press speculates that stricter lockdown measures similar to a “Level 5” could be introduced and scientific advisers warn that Level 4 will not be enough to slow the spread of the virus amid the emergence of the strain. newer and more virulent. Speaking, the new strain is being detected in greater numbers on the continent now and it remains to be seen whether this will trigger a further acceleration in the spread of the virus, or whether families gathering for Christmas will have increased the rate of R

While more roadblocks may be on the way, mass vaccination programs are also underway. The UK has a considerable advantage over the EU in that regard, as it approved the Pfizer vaccine more than a month ago (versus the EU which only approved the vaccine on Sunday) and it seems likely that it will approve the Oxford University vaccine. / AstraZeneca this week (versus the EU, which is reportedly unlikely to approve the vaccine in January). If the vaccines are as effective as expected, this leads the UK to a comparatively early easing of locks, perhaps early in the second quarter of 2021, something that could be argued would be bearish for the EUR / GBP.

Elsewhere, the EU and China reportedly reached an agreement on regulating investment in each other’s economies, with a formal announcement likely to be made later this week. Such a deal is likely to be positive for EU growth in 2021 and beyond and could well have helped the EUR this week. Relations between the UK and China remain comparatively sour due to disputes between the two countries regarding the situation in Hong Kong and over the Huawei ban.

Technical levels

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