The rout continues, Forex traders make millions shorting Sterling
Michel Barnier, the European Union’s chief negotiator, told diplomats from the bloc’s 27 member states that it’s up to British Prime Minister Boris Johnson to make the next move as negotiators seek to break the deadlock over Brexit.
As the U.K. and European Union strive to finalize a deal before Monday evening, a compromise on the longstanding stumbling block of access to British fishing waters is starting to emerge, two people with knowledge of the discussion on both sides said. That would leave the level competitive playing field as the main remaining and stubborn issue.
The U.K. will leave the European single market and customs union on Dec. 31 -- with or without an agreement. Both the European and U.K. parliaments still need to ratify any accord, so time is running short for a deal to be implemented in time.
The pound dropped in early Asian trading as investors questioned how close Britain and the EU are to sealing a deal.
The European Parliament’s U.K. coordination committee will meet with Barnier at 9 a.m.
Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will talk later this evening.
Talks Are on a “Knife Edge”
With the negotiations moving only slowly, one EU official warned that expectations that an agreement will be reached within 24 hours are low. The EU has said that a summit of its 27 leaders that begins on Thursday now marks the effective deadline for a Brexit deal.
“Things are on a knife edge and it’s serious. My gut instinct is it’s 50-50,” Irish Prime Minister Micheal Martin said in an interview with broadcaster RTE on Sunday. “I don’t think one can be overly optimistic about a resolution emerging.
Irish Prime Minister Micheal Martin said on Sunday the odds of a deal were just 50-50 while investment bank JPMorgan (NYSE:JPM) said odds of a no-trade deal exit had risen to one third from 20 percent.
"Decisive hours for the future of EU-UK relations," said Sebastian Fischer, an EU spokesman for Germany, the current holder of the EU presidency.
Failure to secure a deal would snarl borders, spook financial markets and disrupt the delicate supply chains that stretch across Europe and beyond just as the world tries to cope with the vast economic cost of the COVID-19 pandemic.
Sterling was a touch lower vs the dollar, easing off the 2-1/2-year highs of $1.3540 hit on Friday, though overnight and one-week implied volatility rose to an 8-month high.
DEAL OR NO DEAL?
For weeks, the two sides have been haggling - as yet without a result - over fishing rights in British waters, ensuring fair competition for companies and ways to solve future disputes.
EU chief negotiator Michel Barnier told national envoys to Brussels on Monday morning that there was no agreement yet in UK trade talks, a senior diplomat told Reuters.
Updating the EU envoys from 0630 GMT, Barnier said the three most contentious issues in the negotiations have not yet been resolved, according to the diplomat, who was taking part in the closed-door briefing.
"I still think it is more likely than not that we will find a way of getting a deal done but I won't be shocked if it falls apart," Irish Foreign Minister Simon Coveney was quoted as saying by the Irish Times.
"If we don't get a deal in the next few days, then obviously there are serious problems around ratification and timelines."
In a move that could further undermine the talks, the British government will press ahead with draft laws this week that would breach London's earlier divorce treaty with the bloc.
Junior Foreign Office Minister James Cleverly said on Monday the clauses that breach the treaty would be re-inserted.
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