26.11.202018:24 Forex Analysis & Reviews: The pound bets on a deal, so it will react more strongly to the negative on Brexit

Sterling held near a 3-month high on Thursday. Uncertainty about the outcome of the Brexit negotiations is present, however, it is offset by the weakness of the dollar. As soon as the "American" started snapping, the pound jumped from 1.34.

Meanwhile, traders are trying to find a hint of progress in the negotiations and continue to rely on the success of the transaction. However, there are still concerns that the discussion may break down. As the Finance Minister said on Thursday that London will not sign the agreement "at any cost".

According to official negotiators, two issues that are a stumbling block are still on the agenda. Neither side has yet shown enough willingness to budge.

One of the European diplomats allowed the possibility of a deal, but not earlier than the weekend. Another official believes that the best option is next week. Thus, the date is constantly pushed back, and the transition period ends in five weeks.

"Brexit uncertainty is a big driver for the pound at the moment. The decision on this issue will have a greater impact on the exchange rate formation of the British currency in one direction or another," Barclays representatives write.

Also, the topic of further decline in the dollar is widely discussed. There is a signal to sell the US currency by the end of the month.

Due to a shortage of drivers and news during the US holiday period, pound traders will be keeping an eye on any official or unofficial reports about the Brexit negotiations. It is worth noting that negative signals can lead to greater volatility than positive ones. This is because the markets mostly expect a positive result, that is, the conclusion of a deal between London and Brussels.

In favor of a positive outcome on Brexit, the Bank of England's leadership is also calling on local politicians to conclude a trade pact. Otherwise, the consequences for the economy will be much more negative than after the coronavirus pandemic. If all this is combined, it is clear to everyone what picture emerges.

It seems that the regulator does not plan to take emergency measures to save the economy from collapse. The British Prime Minister and his aides have so far refrained from commenting on this issue.