Sterling stabilized above $1.27 on Thursday on the last day of the Brexit negotiations, with traders looking out for any headlines that may shine some light on whether Britain could walk away from the European Union with a deal at the end of the year.

Media reports suggested the United Kingdon has given up hope on reaching a deal so investors should "watch the tone of the statements coming out of today's final meetings to see if they are of a conciliatory or confrontational nature," said Marshal Gittler, head of investment research at BDSwiss Group.

Overnight implied volatility gauges showed traders were slightly nervous about possible emerging headlines on Thursday as levels inched to a one-month high of 8.85pc.

The pound was down 0.1pc at $1.2716 and down 0.2pc versus the euro at 91.02.

Leveraged funds were shorting the British currency as of last Tuesday, but they had cut their positions in the last few weeks to hold just above $1 billion in shorts, according to latest CFTC data.