Pound Softens on UK Threat to Pull Out of Trade Talks if No Progress by Oct 15

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  • Spot rates: GBP/EUR: 1.0952, GBP/USD: 1.2890
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The British Pound lost value in the midweek trading session amidst a rise in concerns the UK and EU could separate at the end of 2020 without a Brexit deal.

A newswire reported that the U.K. government will pull out of Brexit trade negotiations with the European Union next week if there is no clear deal in sight.

Bloomberg quoted a person familiar with the UK position as saying the UK sees an October 15 deadline by which progress in negotiations must be made.

On Tuesday, a senior EU diplomat warned that the bloc had no plans to offer concessions to meet Johnson’s deadline, and would be ready to call his bluff.

Speaking of those comments, a person "familiar with the British position said the government was serious about walking out next week," said Bloomberg.

The news appears to be negative for Sterling, which fell a third of a percent against the Euro and 0.10% against the Dollar.

The developments come as Michael Gove, the most senior minister in charge of preparations for the Brexit transition, said plans for a 'no deal' outcome were being intensified.

Gove told a hearing of the House of Lords EU Committee that the UK was keen for a deal, but will not do one at any price. "If we conclude no deal is on offer, we can accept that."

"We need to ensure the UK is not held hostage in the negotiations," added Gove.

But he added talks are "proceeding in a way which gives us cause for steady optimism" and "there have been clear signs that since the approval of the Internal Market Bill in the House of Commons the talks have been proceeding in a constructive way."

The Pound-to-Euro exchange rate is down a third of a percent to quote at 1.0939 in late London afternoon trade, while the Pound-to-Dollar exchange rate is down 0.10% to quote at 1.2871.

The Pound is highly sensitive to Brexit related headlines at the present moment and is being sent higher and lower as news from both sides of the English Channel hits trading terminals and algorithms.

Expect volatility to remain high heading into the October 15 European Council summit when we are likely to get a more concrete idea as to where negotiations are heading.


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