Sterling at 90 pence against euro could remain steady if Brexit deal is done        

Sterling continues to trade in a narrow 90p to 91p range against the euro which suggests investors expect a deal to be agreed

The new lockdowns across Europe suggest the UK and EU governments will want to avoid a further Brexit shock and the UK economy is much more exposed in this regard.

Between the big second wave to the coronavirus, new lockdowns across Europe, and knife-edge US elections, the Brexit trade talks have slipped into the background. However, the clock is ticking.   

The markets remain calm, though, with sterling continuing to trade in a narrow 90p to 91p range against the euro, which suggests investors expect a deal to be agreed. 

However, quite worryingly, the talks could not even make progress on relatively straightforward issues. 

In fairness to the negotiators, the issues are politically sensitive and a political call will have to be made at the top level. 

The new lockdowns across Europe suggest the UK and EU governments will want to avoid a further Brexit shock and the UK economy is much more exposed in this regard. 

UK prime minister Boris Johnson has been biding his time up to now. Imminent regime change in Washington may help concentrate minds with the US likely to be more favourably disposed towards doing a trade agreement with the UK if there is already an EU-UK trade deal in place. 

Our view remains the upside for sterling may be limited even if a deal is secured, but that the currency could fall sharply if it becomes clear that we are heading for a hard Brexit. 

• Oliver Mangan is chief economist at AIB