The pound edged up on Friday, but was headed for its biggest weakly fall since December's UK election as investors priced in the risk of Britain failing to agree a trade deal with the EU in the 11 months left of the Brexit transition period.
Sentiment towards the British currency took a turn for the worse on Monday after Prime Minister Boris Johnson said Britain would not obey European Union regulations after the transition period, setting out a tough line on the upcoming negotiations.
Adding to the uncertainty, French Finance Minister Bruno Le Maire said this week that British financial services firms would get no access to EU markets after the transition unless they agree to respect EU rules.
A deal needs to be struck before the end of the year to avoid a potentially disruptive break in trading relations.
"Investors seem to begin realizing that the UK-EU trade talks would be arduous, and the risk was high that no agreement may be struck," said Marc Chandler, chief market strategist at
Bannockburn Global Forex, LLC. France is looking at ways to lure clearing in euro derivatives away from London to the EU and lessen the risk of business moving instead to the United States, financial industry officials said.
Against the dollar, the pound rose 0.1% to $1.2939, but was set to end the week with a 2% drop, its biggest weekly decline since mid-December.
Against the euro, which has been hit by a stronger dollar, sterling was up 0.3% to 84.75 pence.
Comments
Comments are closed.