Sterling Slips Below 1.34, Brexit Trade Deal Doubts Emerge

Sterling dipped below $1.34 as doubts resurfaced over whether Britain can seal a post-Brexit trade deal with the European Union, offsetting any optimism from becoming the world’s first country to approve the Pfizer-BioNTech COVID-19 vaccine.

Sterling fell more than 0.4% to $1.3369 and against the euro it hit Nov. 9 lows of 90.40 pence.

The pound hit a three-month high against dollar on Tuesday evening after UK broadcaster Times Radio said the trade deal talks had entered the “tunnel” stage of negotiations.

But the mood switched among traders as the EU’s Brexit negotiator told the 27 national envoys to Brussels that differences persisted, according to a senior EU diplomat present at a closed-door briefing.

“Brexit retains an unmatched ability to induce knee-jerk reactions in the pound, and this morning’s ominous story about Michel Barnier telling EU ambassadors that three obstacles remain to a trade deal with the UK is no exception,” said Ranko Berich, head of market analysis at Monex Europe.

That development overshadowed news that Britain had become the first western country to approve a COVID-19 vaccine, which it is likely to start rolling out next week.

Reporting by Thyagaraju Adinarayan and Olga Cotaga; Editing by Saikat Chatterjee and John Stonestreet

Source: Reuters

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