On December 2, the pound (GBP) sold off steeply against the Euro and the dollar amid reports that the European Union and the United Kingdom negotiators are yet to agree on issues in the Brexit trade talks.
The EU’s chief Brexit negotiator, Michel Barnier, gave an update to the European bloc’s member states. Barnier mentioned that differences remained on three major issues including a level playing field, fisheries, and how to implement the deal once they reach a consensus. A senior diplomatic source says that the ‘deal hangs in the balance’.
Sterling pound plummetted sharply when the headlines around Barnier’s briefing crossed the wires. The pound lost 0.3% against the euro to €1.1083 moments after the news broke. Also, GBP lost 0.4% against the dollar to reach $1.3364. The pound has been positive previously against both of these major currencies in the session before the announcement.
Negotiators have reached a stalemate in talks and there has not been a way out for months. However, hopes for a breakthrough have been rising in recent days.
Times Radio’s chief political commentator, Tom Newton-Dunn, sent the British currency spiking on December 1 after tweeting that the EU and the UK had entered the ‘tunnel’; which is a super-secret final phase of these negotiations where the definitive text of an agreement is approved. Newton-Dunn tweeted on Wednesday:
“It appears the four-day tunnel has failed.”
One analyst, Neil Wilson, said:
“Brexit talks drag on. Still, expect a deal in the coming days – GBP crosses will be increasingly sensitive.”
On December 2, the UK’s public accounts committee warned that Britain was facing a ‘catastrophe’ at the border. It accused the government of lack of preparedness for Brexit. All these factors have weakened the pound with the future seeming uncertain for now.