By Yasin Ebrahim
Investing.com – The pound fell Monday as investors continued to sweat over the prospect of the UK crashing out of the European Union without a deal amid ongoing differences on fishing quotas, with just nine days to go until the year-end transition deadline.
GBP/USD fell 0.81% to $1.3354.
Fishing quotas remain "difficult to bridge," an EU diplomat said, according to Reuters. Most issues, however, are "preliminarily closed or close to being agreed," the diplomat added.
The stalemate on fishing quotas comes after the EU rejected the UK's improved offer on fisheries. Under the amended proposal on fishing quotas, the EU would get to keep about 66% of its catch in UK waters, well above the previous offer of just 40% tabled last week.
"The UK went all the way from insisting that the EU reduce its catch in UK waters by 60% over three years down to 30% over five years with yesterday’s proposal. The EU still rejected that offer this morning because it was higher than their demand that no more than a 25% reduction be imposed over seven years (down from 10 previously)," Scotia Economics said.
Without a deal by year-end, trade between the UK and EU will default to World Trade Organization (WTO) rules, which some argue could see both sides increase levies, leading to higher prices.
The weakness in the pound comes as data showed the UK economy rebounded by more than expected in the third quarter as the country emerged from the spring lockdown.
Still, the Bank of England chief economist Andy Haldane said the economy remains under pressure and called on the government to continue supporting the labor market until the pandemic is over.
"We are still in a hole and the hole is still deep. We need to keep climbing out that hole through policy measures and the vaccine. But once we have climbed out – and we will – we mustn’t forget about long-term structural issues: what will give us good work at good pay," Haldane told the Guardian.