Daily FX Research

GBP rose on Monday following constructive talks from EU-UK over the weekend. On Sunday, both sides agreed to "go the extra mile", reversing last weeks worries that Britain could leave the EU without a deal.

USD could continue to remain weak as optimism around the global recovery continue as mass vaccinations rollout. Revamped hopes around a US stimulus package added further downwards pressure to the USD.

"The latest developments support the notion that a last minute deal would be reached, but risks remain high that efforts to reach a deal could still fail posing significant downside risks for the pound" - Lee Hardman currency analyst at MUFC.

If a deal is reached the pound would trade above $1.35, a large multiyear resistance area, however if a deal is not reached by Jan 1st then GBP could fall to $1.25.

Technically, GBP is beginning to look like a more attractive long. At the beginning of December the pound was extremely overbought, not so anymore. The over-bought condition is working itself off nicely and the pullback is finding support near $1.32. Coupled with vaccine rollouts and optimism of a global recovery, GBP could remain supported.