Credit: REUTERS/THOMAS WHITESept 24 (Reuters) - While Brexit has dragged on since the 2016 vote, the outcome of protracted negotiations will be pivotal for sterling in Q4. Economists are still optimistic that a compromise will be found , but real progress remains elusive, and a 'no deal' exit from the EU would hit the UK economy hard.
Top negotiators from both sides expressed determination to reach a deal ahead of informal talks on Wednesday, but there was no mention of how a compromise between the EU's 'even playing field' in government subsidies, workers' rights and environmental issues, and the UK's 'sovereignty' stance would be achieved .
Neither side wants to be blamed for the economic impact of a 'no deal' outcome to the talks, so their resolute stance is no surprise as negotiations resume.
The Guardian newspaper carries analysis by the London School of Economics that suggests longer term, the cost of a no-deal Brexit to the UK economy could be two or three times more than the Bank of England's COVID-19 forecasts. Meanwhile a British Chambers of Commerce survey shows most UK firms are unprepared for the end of the Brexit transition .
Technically GBP/USD is bearish with 5, 10, 21 daily moving averages, and momentum studies all tracking south towards 1.2542, 76.4% of the June-September rise.
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