Both Brexit talks and the US fiscal stimulus saga have been dominating cable’s trading, with hopes on both pushing the GBP/USD pair higher before adverse headlines doing the opposite. These two sets of deliberations compete with increasing coronavirus cases and data for attention next week, FXStreet’s Analyst Yohay Elam briefs.

Key quotes

“The EU Summit on Thursday and Friday is touted as one of the critical moments to reach a Brexit deal. Johnson is unlikely to abandon talks, which could drag until the last moment, New Year’s Eve. Will the extension of negotiations help the pound? Probably not, as investors are likely pricing in protracted deliberations. On the other hand, reports of ongoing disagreements could keep the cap on the pound.”

“COVID-19 statistics are set to have a greater role in shaping the exchange rate, especially if the government begins mulling a London lockdown. Increases in cases and fatalities could send the sterling lower even before any restrictions are imposed as consumers could be reluctant to go out and about. The reduced furlough scheme may also weigh on the economy.”

“An update on the labor market is the highlight of the economic calendar. The UK Unemployment Rate is projected to have remained at a low level of 4.1% in August, thanks to the government’s successful furlough program. The Claimant Count Change provides a more up-to-date look at the economy. After an increase of 73,700 applications in August, another jump in September could prompt the pressure on the pound.”

“BoE Governor Bailey will have additional opportunities to comment on the economy. Will he express more concerns? Any hint of sub-zero borrowing costs could trigger falls.”

“The fate of fiscal stimulus remains left, right, and center, but time is running out ahead of the elections. It is essential to remember that Senators begin confirmation hearings for Judge Amy Coney Barret for the Supreme Court. They may prefer to focus on the nomination rather than extend the seemingly neverending talks on further relief, leaving these decisions to after the vote.”