Time is running out to reach a deal on Britain’s post-Brexit trade relations with the European Union. ©AFP/File Tolga Akmen

 

London (AFP) – The pound slumped around one percent against the dollar and euro on Monday as post-Brexit trade talks between Britain and the European Union hung in the balance.

Major European stock markets dropped except for London, as the sliding pound helped boost share prices of multinationals trading on the benchmark FTSE 100 index.

Around 1630 GMT, the pound was down by 0.7 percent against the dollar, recovering part of its losses. Meanwhile the euro jumped by 0.8 percent versus the British currency.

The FTSE drifted higher, while oil prices retreated by about 0.4 percent.

Down by around half-a-percent, sterling’s losses widened sharply after Britain’s Sun newspaper said Prime Minister Boris Johnson was willing to abandon post-Brexit trade talks with the European Union, falling by more than 1.0 percent at one point.

Johnson was due to speak with EU Commission chief Ursula von der Leyen later in the day.

While Britain made one concession on Monday, it ruled out extending talks into 2021, and hopes were not high for an imminent breakthrough as time runs out to strike a deal before Britain leaves the EU single market on December 31.

“The British pound declined against all of its major trading partners as investors placed bearish hedging positions and some doubted that a deal would be made by Wednesday’s artificial deadline,” said market analyst Edward Moya at currency trading platform Oanda.

“Sand is running out of the Brexit hourglass as the UK seems to have ruled out extending the Brexit transition period,” Moya added, putting the real deadline for a deal at the end of the week.

The threat of a wrenching “no-deal” comes after Brussels’ chief negotiator Michel Barnier briefed ambassadors from EU member states at a pre-dawn crisis meeting, warning that divisions were still stark after talks with his UK counterpart David Frost broke up overnight.

– Vaccine stimulus –

Market focus was also firmly on Covid-19 vaccine developments as the new trading week got under way.

Traders are keeping tabs on the deployment of vaccines around the world, with Britain in line to start offering jabs this week.

US approval of its first drug could come as soon as Friday. Belgium, France and Spain have said jabs will begin in January for the most vulnerable.

There is optimism also that US lawmakers will finally agree on a long-awaited stimulus package.

Senators and their teams worked all weekend on a detailed bill, which “will probably come out early this week”, Republican senator Bill Cassidy told “Fox News Sunday”.

Wall Street traded mixed with the Dow slipping by 0.4 percent in late morning trading, after the three major indices all posted record highs on Friday.

– Key figures around 1630 GMT –

London – FTSE 100: UP less than 0.1 percent at 6,555.39 points (close)

Frankfurt – DAX 30: DOWN 0.2 percent at 13,271.00 (close)

Paris – CAC 40: DOWN 0.6 percent at 5,573.38 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,528.15

New York – Dow: DOWN 0.4 percent at 30,085.70

Tokyo – Nikkei 225: DOWN 0.8 percent at 26,547.44 (close)

Hong Kong – Hang Seng: DOWN 1.2 percent at 26,506.85 (close)

Shanghai – Composite: DOWN 0.8 percent at 3,416.80 (close)

Pound/dollar: DOWN at $1.3350 from $1.3423 Friday

Euro/pound: UP at 90.90 pence from 90.21 pence

Euro/dollar: UP at $1.2136 from $1.2110

Dollar/yen: DOWN at 103.95 yen from 104.19 yen

West Texas Intermediate: DOWN 0.4 percent at $46.09 per barrel

Brent North Sea crude: DOWN 0.3 percent at $49.11 per barrel

burs-rl/wai

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.