Disagreements center on a future trade deal and the rejection by Northern Ireland's Democratic Unionist Party (DUP), which supports the ruling Conservative Party in the British parliament, of customs arrangements tentatively agreed by negotiators for the Irish border. An important factor in favour of purchases may be the closing of many short positions in the British currency, built in anticipation of a no-deal Brexit. Sterling has risen 1.92% against the greenback this week, leading it to a 1.1% 2019 gain, while the Pound-to-Yen rate has gone from a -2% loss to being up 2.26%.
The dustup comes only days after the United States and China reached a preliminary partial trade agreement that suspended new tariff increases that had been planned for this week.
Asian equity markets were mostly lower after China said its economy expanded six percent in the third quarter, marking the slowest pace in 27 years, as leaders struggle to address weak domestic demand and the long-running U.S. trade war.
"If Parliament rejects the deal or attaches a confirmatory referendum to it, the United Kingdom government will be forced to ask the European Union for an extension, which ought to be positive for the GBP".
Hopes of a breakthrough lifted markets on Tuesday, but investors turned more cautious stance after looking for a deal during the night that never came.
The DUP-key group of Northern Eire politicians-has mentioned it doesn't assist the deal, which has held again the pound's rally, because it retreated to $1.2772.
With limited movement in GBP exchange rates, investors are sitting on their hands ahead of Saturday's "meaningful" vote which could see another Brexit extension if parliament reject the deal. Lower growth potential risks turning into a long-term factor of pressure on the British currency, as it will make the policy of the Bank of England softer than earlier.
London's FTSE 100 was down 0.5% to 7,213.45 points, Paris's CAC 40 lost 0.4% to 5,643.08 and Frankfurt's DAX 30 slipped 0.2% to 12,486.56 points at the close yesterday.
On Wall Street, the Dow Jones index rose at the start of business.
"Even if a deal is signed, it remains uncertain if the obligations can be fully met on both sides", strategists at Singapore's DBS Bank said in a note. US Treasury Secretary Steven Mnuchin said that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China has not been reached by December, but he also added that he expected the agreement to go through.
In the worldwide market, spot gold remained unchanged at $1,491.62 an ounce.
The euro rested at US$1.1125, not far from US$1.1140, its highest since August 26.
Benchmark Brent crude oil futures moved between negative and positive territory, trading down 3 cents to $59.88 a barrel by 1328 GMT.
"A meaningful de-escalation in US-China trade frictions would help alleviate some of the market's most bearish concerns, and at a minimum, it could ease the... headwinds", said AxiTrader's Stephen Innes.