A measured dip turned into a rebound-erasing fall for the pound this afternoon, the currency widening its losses as it processed what Michel Barnier said about the state of the UK/EU negotiations this Thursday.
Barnier warned that the two sides had reached ‘deadlock’ over the issue of the UK’s payments to the EU, claiming that the situation was ‘very disturbing’. This headline quote overshadowed the more conciliatory comments made by the EU’s chief negotiator, with Barnier arguing that ‘decisive progress’ was still within reach ‘over the next two months’.
As for David Davis, the MP urged Barnier and the EU leaders set to convene at next week’s summit to ‘build on the spirit of cooperation we now have’ and give the green light for trade talks between the two parties. This despite Barnier stating that under the ‘current circumstances’ he can’t recommend such a course of action.
The pound clearly paid more attention to Barnier than his UK counterpart, at points plunging as much as 0.7% against the euro and the dollar. And though sterling has managed to pull back from the brink, it’s still trading at a one month low against the dollar, while cable has lost a chunk of the week’s rebound with a 0.4% drop.
Elsewhere the Dow Jones dipped 0.1% after the bell as the dollar paired its gains against the pound with a 0.2% rise against the euro. That’s because Thursday’s US data, namely a better than forecast core PPI reading and the best jobless claims number for 6 weeks, only gave more ammunition to the Fed’s hawks.
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