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Pound Sterling outperformed on Thursday and New Year's Eve as Britain's new Brexit deal with the EU landed on the statute book following a last minute rush to ratify the pact before the curtain closes on an otherwise coronavirus-contaminated 2020.
The British Pound showed a remarkable lack of enthusiasm to news the UK and EU had finally struck a post-Brexit trade deal, which brings to an end years of uncertainty for businesses, investors and millions of citizens.
The British Pound extended gains on signs that a post-Brexit trade deal had been agreed, but a final confirmation from UK Prime Minister Boris Johnson and EU Commission President Ursula von der Leyen was still elusive on Christmas Eve morning.
The Pound-to-Euro exchange rate popped higher and then fizzled on Wednesday following reports that a Brexit trade agreement has been reached between Britain and the European Union, with the tepid response potentially reflecting uncertainties about the agreements' contents and its path toward ratification.
According to media reports out overnight EU and UK negotiators will continue trying to find a final compromise on fisheries and the level playing field through the course of today, with a view to striking a deal on Dec. 24.
The British Pound has traded towards the top of recent ranges against the Euro and is in touch with two-year highs against the Dollar amidst ongoing signs that EU and UK negotiators continue to chip away at a post-Brexit trade deal.
The Pound-to-Euro exchange rate has extended gains to 1.1077 during the mid-week session, amidst growing anticipation that the EU and UK will announce a deal on post-Brexit relations in the near-future.
A slightly positive tone to EU-UK post-Brexit negotiations on Sunday mean the market is likely to send the British Pound higher on Sunday evening, when foreign exchange markets in Asia open for the week.
Sterling suffered a second consecutive drubbing on Friday as the market scrambled price-in the seemingly diminishing prospects of a Brexit trade agreement, taking the Pound-to-Dollar exchange rate back toward the midpoint of a six month range that reflects little better than 50/50 odds for a deal.
The British Pound has fallen by over a percent against the Euro, Dollar and all other major currencies over the course of the past week amidst fears the EU and UK are not bluffing about the need to prepare for a 'no deal' outcome to post-Brexit trade negotiations.
The British Pound is vulnerable to significant declines after the EU and UK set Sunday as a final deadline for talks on a post-Brexit trade agreement.
The Pound remains supported by incremental progress in negotiations between the EU and UK, but the substantial 'breakthrough moment' on the post-Brexit trade deal remains elusive and uncertainty over the outcome of negotiations uncertain.
Data from Reuters shows the cost of hedging against a sizeable fall in the value of Pound Sterling has shot higher, in sympathy with growing anxieties for a 'no deal' outcome to trade negotiations.
The British Pound proved relatively sanguine in early trade at the start of a new week that would more likely than not see Brexit trade negotiations reach a conclusion.
Foreign exchange strategists at a leading Scandanavian lender and investment bank have said a 'no deal' outcome to post-Brexit trade talks is likely, and the Pound is likely to weather the outcome.
The British Pound went lower against its main rivals on Wednesday following confirmation that EU and UK negotiators are unlikely to strike a post-Brexit trade deal this week.
The British Pound starts the new week with some modest gains against the Euro, Dollar and other major currencies, but the gains are too modest to make up for the sharp decline witnessed on Friday.
The Pound-to-Canadian Dollar rate more than unwound the last of its gains for the week on Friday as the strength of the Loonie collided with Brexit-inspired weakness in Sterlin, although with the clock running down rapidly the risk in the short-term could be that the Pound weakens further before any recovery.
EU and UK negotiators will meet for face-to-face talks in London on Saturday to try and thrash out a post-Brexit trade deal, but it looks as though significant disagreement remains over fisheries.
EU Chief Brexit Negotiator Michel Barnier has apparently called a meeting of EU fisheries ministers for Friday.
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