London: The pound fell for a second day as the dollar rose across the board, with the market awaiting confirmation of whether Brexit talks will move on to trade.
One-day volatility in sterling hit a three-week high as a senior British official said Brexit talks risked being torpedoed by the issue of the European Court of Justice, while a European Union Parliament spokesman said more progress was needed on the Irish border and citizens’ rights. The EU has set Monday as the deadline for sufficient progress, with UK. Prime Minister Theresa May and European Commission President Jean-Claude Juncker meeting for lunch in Brussels.
Sterling has rallied over the past four weeks versus the dollar, partly on the back of a weaker US currency. Further pound strength is likely dependent on some sort of positive development in Brexit talks, according to Neil Jones, head of hedge fund sales at Mizuho Bank Ltd.
“There’s quite a bit of optimism factored into the pound,” said Jones. A lack of approval from the EU for any of the key sticking points ahead of its Dec. 14-15 summit could send the pound lower, while a verdict of no progress could drive it below $1.33, he said.
The pound fell 0.4 per cent to $1.3424 by 10:26am in London, with better-than-expected construction data failing to give it much of a boost. It was little changed at 88.24 pence per euro. The yield on UK government bonds rose three basis points to 1.27 per cent, after dropping 10 basis points on Friday.
