How President-elect Biden pushed the British Pound to two-month highs?

GBP/USD outlook divides analysts as trade deal hopes rise.

Has the President-elect twisted Boris Johnson's arm to come to a Brexit agreement?

We have been talking about Brexit since the referendum, in 2016, yes over 4 years ago!!

Only quietly set aside by the Covid19 pandemic, now it is back in the fore.

Forex brokerages, analysts, me included have been peddling the impacts of Brexit for a long while now.

Let’s go back in time

June 2016

Brexit referendum shocks forex markets.

On 23 June 2016, the UK voted to leave the EU. This decision took markets by surprise. Due to last-minute polling which suggested that ‘remain’ had the edge, sterling initially rallied – with the pound to euro rate before Brexit rising to €1.32, while also reaching highs of $1.50 against the US dollar.

But as the Brexit result resonated around the world, the pound experienced its largest intra-day collapse in 30 years. Sterling fell harder against the dollar than it did against the euro – reaching lows of $1.32 and €1.20 respectively – as the eurozone was already facing internal struggles over an Italian referendum and French elections.

Since then volatility has continued due to diverse views on a deal or no deal being agreed and the impact on the UK economy, intensified by the Irish border issue and fishing quotas.

In September 2019, the Pound spiked after reaching lowest point since 2016.

Fears of no deal intensified towards the end of August 2019, which saw sterling reach its lowest point against the dollar since a flash crash in 2016 – trading at lows of $1.19585. However, following a move from MPs on 4 September which effectively blocked a no-deal Brexit, the pound spiked again to break through $1.2340.

Currently, the Pound-to-Dollar exchange rate has advanced back toward September highs as expectations of a trade agreement with the EU solidify.

Is this optimism or a reality?

Biden becomes U.S. president-elect at a critical moment in Brexit talks, as negotiators enter the final weeks where agreement is possible ,if the U.K. is going to leave the transition period at the end of the year with a trade deal in place. Biden has long opposed Brexit and his Irish roots have sparked hopes in Ireland that he would take the Republic’s side in any cross-border Brexit dispute.

"The bottom line is that Brexit is an act of self-isolation," Charles Kupchan, a former President Barack Obama official and now Biden adviser, told Times Radio on Sunday”.

I am sure such comments will be refuted by the Brexiters, especially as the point of Brexit was for the UK to take back control of its own destiny.

Other disagree, Sophia Gaston, director of the British Foreign Policy Group, said the impact of Biden’s victory on the Brexit negotiations will be “minimal.”

Downing Street was under at least some pressure to give ground with Bank of England (BoE) Governor Andrew Bailey having broken months of silence when appearing to equate, while not quite actually equating, the anticipated long-term effects of a 'no deal' Brexit with the upfront economic costs of the pandemic.

The Telegraph suggested a significant 'intervention' could be made in the Brexit talks by Prime Minister Boris Johnson to facilitate a political agreement on terms of the future trade relationship ahead of December's European Council deadline.

Johnson is expected to speak with Brussels' Ursula Von der Leyen this week in what is billed as an intervention but which could effectively be a climbdown by the PM from objections to what have so far been controversial impediments to progress.

European Commission President Ursula von der Leyen has sent one of her most senior officials, Stephanie Riso, to assist Michel Barnier in negotiating a trade deal with Britain, raising hopes of a deal by next Friday, the Times of London reported.