Investors are either holding back until there is an official statement out of fear of a last-minute hiccup, or expectations that a deal would be done have already been mostly priced in, raising the possibility of ‘buy the rumour, sell the fact’ trades in the coming sessions.
However, a more likely reason for sterling’s unenthusiastic response is rising concerns about the British economy, deal or no deal. The UK recorded almost 40,000 cases of coronavirus on Wednesday – the highest daily tally so far in the pandemic. The government yesterday added more regions of England to the highest tier of restrictions, effectively placing them under full lockdown. Making matters worse, travel across the Channel – the UK’s most important trade route with Europe – remains clogged up with queuing lorries and the recent easing of the ban by France has done little to alleviate the situation.