FXStreet reports that beyond the deal, economists at HSBC struggle to see how the UK will retain its competitiveness compared to its current position.

“Although the rally in the GBP in 2020 suggests the FX market anticipated that a deal was more likely than not, confirmation allows the FX market to price out whatever modest probability had been attached to a ‘no-deal’ outcome. In our view, the announcement should keep the GBP elevated over the near-term, but further upside will likely be limited, given the agreement looks largely priced in.”

“Despite a solid performance versus the USD in 2020, the GBP has broadly underperformed its G10 peers. We believe underperformance is justified and is likely to continue in 2021. We see GBP-USD trading broadly sideways in 2021.”