Sterling down 0.6% after Barnier’s speech
The pound has suffered further falls following claims from EU chief negotiator Michel Barnier that Brexit talks between the UK and the bloc were in a state of “deadlock”.
The UK currency is down 0.7% yo $1.3134 on an intraday basis, having started the day with a small rise, following the speeches given by Barnier and UK counterpart David Davis.
Meanwhile, the FTSE 100 index has benefitted from the currency fall, rising 0.4% to 7,564, its higher lever in 12 months.
Barnier said a lack of clarity over the so-called EU divorce bill, which could see the UK paying the EU billions of pounds, was a key aspect holding back talks.
He said: “On this question, we have reached a state of deadlock which is very disturbing for thousands of project promoters in Europe, and it is disturbing also for taxpayers.”
Barnier that he was unable “in the current circumstances” to ask the European Council for permission to begin progressing talks and discuss the UK’s future relationship with the EU.
However, he also acknowledged “new momentum” in negotiations, adding that “decisive progress is in our grasp within the next two months”.
For his part, Davis urged the council to give Barnier the mandate he needs, in order to “build on the spirit of cooperation we now have”.
Commenting on Barnier’s concerns, Shilen Shah, bond strategist at Investec Wealth & Investment warned there was a chance the deadlock could become “permanent”.
However, he added that markets are “likely to focus on [Barnier’s] comments that ‘decisive progress’ could be made by Christmas – limiting any sell-off in UK-related assets”.