UK economy, not Brexit, will drive the pound in 2020, analysts say

The pound will react more to U.K. economic indicators than the twists and turns of Brexit in the first half of 2020, and will likely remain supported, according to currency strategists.

British Prime Minister Boris Johnson and new European Commission President Ursula von der Leyen met in London on Wednesday to begin discussions over a future zero-tariff trade deal, with the U.K. scheduled to leave the EU at the end of this month.

Johnson has pushed legislation to prevent trade talks extending beyond December 2020, despite seeking a similar deal to that between the EU and Canada, which took seven years to negotiate.

U.K. lawmakers on Thursday approved legislation allowing Britain to leave the European Union with an exit deal, following three years of stalemate over the terms of the departure.

Analysts are suggesting, however, that the pound is unlikely to reattach itself to Brexit developments until later in the year when progress, or a lack thereof, becomes clear. In the meantime, economic data, fiscal and monetary policy will guide sterling.

Others are even more bullish on the outlook for cable, and HSBC Senior FX Strategist Dominic Bunning told CNBC on Wednesday that investors should investors should look to 2017 for an example of how the market may treat the currency during the negotiation period.