Pound Sterling Slumps against Euro Amidst Brexit Jitters
The pound erased gains and slipped to a three-week low Wednesday after the EU's chief Brexit negotiator said progress had stalled, cooling expectations that a deal was near. GBP/USD fell 0.45% to 1.3354. The EU's chief negotiator Michel Barnier said a deal wasn't guaranteed, signaling that differences over key issues including access to UK fishing territory and level playing field rules remain a stumbling block. The news comes a day after the reports suggesting that post-Brexit trade talks had reached the so-called 'tunnel' - a media blackout period - stoking hopes both sides were set to reach a consensus on a deal.
Ahead of the update, there were signs the ongoing stalemate was starting to unnerve some members, who have called on the EU to ramp-up preparation for a no deal scenario. There likely could be another twist to come in Brexit talks in the days ahead as the UK's proposal for a new finance bill - that undermines parts of the Brexit Withdrawal agreement - could dent the little progress in negotiations seen so far, Daiwa Capital Markets warned. "if the UK government presses ahead next week with draft clauses in the Finance Bill that were inconsistent with the Withdrawal Agreement, Barnier judged that the talks would be 'in crisis'." Time is running out for a post-Brexit deal just under a month to go until the end of the Brexit transition period on Dec. 31, when the UK, without a deal, will trade with the EU under economically-burdensome World Trade Organization terms.
France's President Emmanuel Macron also said on Wednesday he's keeping a close eye on Brexit trade negotiations and won’t sign up to anything that goes against France’s long term interests. Political commentators say France is looking to maintain as much acccess to UK fisheries as is possible, and there is the potential for the talks to fall apart should France reject any deal they believe to significantly disadvantage their fishermen.
It is reported EU states are pressing Barnier to show them any deal with the UK before it is agreed, amid concerns the bloc’s chief Brexit negotiator may concede too much ground in the final days of negotiation.
"Barnier will be asked to relay the message to the Commission that the member states would like to have prior scrutiny of a possible agreement before closing it. Being in the dark makes people nervous," an EU source told The Guardian.