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The British pound fell more than 1 percent to a low of more than five months on Thursday as the UK and the EU prepared for emergency talks on a future trade deal.
The British pound fell to 91.68 pence against the euro in afternoon trading, after falling to 91.78 pence, its lowest level since March 26. Against the US dollar it also fell to $ 1.2924, approaching a six-week low of $ 1.2885 it hit the day before, before cutting some of those losses for the latest trade down 0.2 percent.
British Prime Minister Boris Johnson’s spokesman said the UK will reiterate its commitment to implement the divorce deal and that the bill was aimed at creating a “safety net” for the UK once it leaves the EU. .
Thursday’s meeting adds to ongoing negotiations this week. The EU could take legal action under the treaty with the UK if Thursday’s emergency talks do not reassure Brussels sufficiently that a proposed new British law will not break agreed commitments.
“There is an increased risk of a no-deal (Br) exit,” said Simon Harvey, a currency analyst at Monex Europe, a UK broker.
“This new bill has not only introduced the risk of resorting to the terms of the WTO (World Trade Organization), but also the possibility of a hard border” in Ireland, Harvey said.
‘Ahead of the crowd’
The market has turned substantially bearish on the British pound and the drop in the British pound was “people guessing ahead of the crowd,” he said.
With the publication of the Internal Market Bill on Wednesday, the UK took steps to revoke the Brexit divorce deal signed with the EU last year, furthering its plan to act outside of international law.
Investors tried to understand if the bill to undermine the Brexit divorce deal would cause the EU to leave the negotiating table, but so far the EU has stood firm to continue talks. EU negotiators are trying to assess how to deal with London.
Analysts at Goldman Sachs believe that the UK government’s measures are aimed at obtaining “concessions on the UK’s ability to diverge from EU regulatory standards while still enjoying zero-duty / zero-quota access to EU markets.” after the transition period ends this year. – Reuters
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