No Deal

Sterling weakened against the Dollar yesterday on worries that Britain might not manage to clinch a transition deal with the European Union at a summit later this month.

Even against a euro shaken by the cautious tone of the European Central Bank’s chief at a press conference after a policy meeting.
ECB President Mario Draghi’s comments overshadowed the central bank’s dropping of a long-standing pledge to increase its bond purchases if needed, a move that briefly spurred buying of the single currency.

European Council President Donald Tusk said on Thursday that Brexit negotiations risk stalling if Britain does not present a realistic solution for the future of the Irish border after London rejected an EU fall back proposal last week.

Britain’s government has said it does not want a customs union with the EU, without which the EU says it would need to regulate Northern Ireland’s trade to avoid a return of customs checks.

British leader Theresa May, backed by her hard-line pro-British Northern Irish parliamentary allies, said no prime minister could ever agree to such terms, which would “threaten the constitutional integrity of the UK”.

British Finance Minister Philip Hammond said on Wednesday that a transition deal would be concluded this month, but investors remain uncertain.

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