Hopes for better prospects next year, and money, continue to push up global markets. The engine of growth is the US stock market, which seems to be ready to update new highs before the end of the year. Investors, in particular, are playing back the signing of Donald Trump's allocation of $900 billion to help the economy affected by the pandemic. Although the signing of the document is hard-won, it can be called timely to some extent. If the outgoing President were to back down again this year, the government would be forced to consider a partial shutdown of the US economy, which could begin on Tuesday.
Risk appetite is pushing down defensive assets to new lows. The Swiss franc fell against the euro on Monday to its lowest level in almost 7 months amid the trade deal between the EU and Britain. The dollar index tested a weekly low at 90 points but has so far refrained from further decline.
Meanwhile, a negative background is forming on the EUR/USD pair. The US Treasury Department is due to issue $24 billion in Treasury bonds on Monday, which is short-term but will still support the dollar. That was the first reason, and there is a second reason. In the interbank lending market in London, the 3-month dollar LIBOR rate rose to its highest in 2 months. This indicates an increased demand for liquidity from banks. The current demand can be explained by the Christmas holidays, usually, during this period, bankers stock up on dollars in case of force majeure.
Within a few days, the short-term seasonal factor will come to naught, and the pair will probably catch up. This is a short-term seasonal factor that will be leveled in a few days. The growth benchmark is still 1.225–1.227.
As for the pound, the conclusion of a Brexit deal has been announced. Investors have been waiting for this event for 4 years and now they can breathe a sigh of relief – but is it so? Now the question arises: which way will the pound move next? If we are dealing with the fact that this factor is already taken into account in the quotes, then it is quite logical to see a decline in the pound. However, the second wave of growth is also not out of the question, and here's why. Recalling the events of 2 years ago, when it came to the conclusion of a trade deal between the UK and the EU, the pound was then quoted at around 1.40 against the dollar. In the medium term, a return to this round mark is not excluded.
On Monday, the pound sterling is adjusted down, which, in particular, is due to the short-term strengthening of the US dollar due to the above reasons. We are talking about the placement of Treasury bonds by the US Treasury Department.
Here are the opinions still expressed by strategists about the further dynamics of the pound.
"Markets are likely to wait until next week before buying the pound again, fearing huge queues in the English Channel as the new rules come into force," OANDA wrote.
Despite the fact that the transaction took place, its character in the markets is called rather poor. Any subsequent gains for England are expected to be modest. In addition, Brussels has not yet made a decision on whether to grant Britain access to the bloc's financial market.
Currency strategists at Daiwa Securities do not rule out that by the summer the pound will fall to 1.30 against the dollar, and the Euro against the dollar to 1.15.
