The pound (GBPUSD=X) declined against the US dollar after EU’s chief negotiator, Michel Barnier said he is “disappointed” as the seventh round of Brexit talks failed to yield any breakthrough.
Speaking at a Press conference after talks ended, he said: “Too often this week it felt as if we were going backwards more than forwards.
“What I said in London in July remains true. Today at this stage, an agreement between the UK and the European Union seems unlikely.”
Barnier also questioned why “valuable time was being wasted” during trade talks, saying that the bloc wants “nothing more and nothing less” than what Boris Johnson had committed to during talks with the 27 EU leaders last October
The deadlock and breakdown in talks is a negative update for sterling, as it suggests weeks of uncertainty lies ahead, with negotiators scheduled to hold talks up till 2 October.
Earlier this morning, the pound to dollar exchange rate had recorded a high of $1.32 (£1) after rising on strong economic data, but has since retreated back to $1.31.
Before the Brexit talks deadlock struck, sterling had been running higher on the backdrop of some positive UK economic data releases — taking the pound to euro rate (GBPEUR=X) from a high of €1.118 down to €1.114.
“Whilst the market was not positioned for a breakthrough this week, it’s getting closer and closer to the crunch point – the longer we go without a deal the more pressure comes onto the pound,” Neil Wilson, chief market analysts at Market.com, said.
Recently, sterling had made some gains, after recovering on almost all grounds against the dollar rising to $1.31 in recent days up from $1.26 a month ago and a low of $1.15 in March — with the recovery largely a product of dollar weakens and not sterling strength.
Barnier also stressed that “level playing field’ is about workers and consumers rights, and blasted the UK for not making “any progress whatsoever” on the issue of fisheries. The EU’s negotiator’s latest comments echo similar ones he made in July after the fifth round of Brexit talks also ended with little progress.
In response, David Frost, the UK’s Brexit negotiator accused the EU of making talks “unnecessarily difficult” by “insisting” the UK must sign up to the bloc’s state aid and fisheries policy.
Frost warned “time was running out” and said that “little progress” has been made at the end of the latest round of talks to broker a post-Brexit trade deal with the EU.
He added: “We have been clear from the outset about the principles underlying the UK approach.
“We are seeking a relationship which ensures we regain sovereign control of our own laws, borders, and waters, and centred upon a trading relationship based on an FTA (free trade agreement) like those the EU has concluded with a range of other international partners, together with practical arrangements for cooperation in areas such as aviation, scientific programmes, and law enforcement.
“When the EU accepts this reality in all areas of the negotiation, it will be much easier to make progress.”
The Brexit negotiator reiterated that the UK “will continue to work hard to reach an agreement.”
The next round of talks are due to be held in London in the week of 7 September, with chief negotiators and their teams “agreeing to remain in close contact over the next two weeks.”