Pound falls back from recent high amid Brexit doubts
The pound has fallen back from a more than two-year high after post-Brexit trade talks between the UK and EU ran into trouble at a crucial juncture.
Negotiations are now in a “serious situation,” according to a Downing Street spokesperson last night. They urged the EU to change its position “substantially”.
In a separate call European Commission president Ursula von der Leyen said “big differences” between the two sides remained.
The pound was last down 0.5 per cent to $1.352 as traders reassessed whether a deal would be reached. Sterling was off by 0.4 per cent against the euro at €1.103.
It had risen to a 31-month high yesterday of more than $1.358 when it appeared negotiators were making progress in Brexit talks.
Yet the situation soured overnight. Two key issues – state-aid rules and fishing rights – again appear to be blocking the path to a deal.
Prime Minister Boris Johnson has said that the EU’s €750bn (£680bn) coronavirus recovery fund must not be exempt from competition rules, the Financial Times reported.
Yet the pound was still trading at around its highest level in two years. Many analysts said they still expect a deal.
“We think that there are still hopes for a trade agreement before year end, hopes that may allow the British currency to rebound again,” said Charalambos Pissouros, senior market analyst at JFD Group.
Neil Wilson, chief market analyst at Markets.com, said: “The spot market still believes a deal is coming although odds on a no-deal have shortened in the last 24 hours.”
A lower pound helped the FTSE 100, which was up 0.3 per cent to 6,570 points. The overseas earnings of FTSE companies do better under weaker sterling.