Goldman Sachs: Technical Progress, Political Timing

Goldman Sachs note that "EU and UK negotiators have reportedly continued to make progress on a Brexit deal in recent weeks, with most of the legal text of an agreement now completed for all but the three most contentious issues. And, while top-level officials have been hampered by COVID isolation protocols, that should not have a material effect on their ability to make a deal. From here, the highest hurdle is mostly a political one. While talks have taken longer than originally planned, the EU Council meeting on 10-11 December still looks like a sturdy backstop and an achievable goal to see a final agreement, in our view. Further progress, combined with a steady tailwind of cyclical optimism around the prospects for recovery in 2021, should be enough to keep Sterling on its appreciation trend; we keep open our short EUR/GBP trade with a target of 0.87."