NEW YORK – The pound fell 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.
Near 2200 GMT, sterling was off its lows, but still in retreat against the US and European currencies after London announced that British Prime Minister Boris Johnson would travel to Brussels in the coming days to meet with European Commission President Ursula von der Leyen.
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.
“Talks are in the same position now as they were on Friday. We have made no tangible progress. It's clear this must now continue politically,” a senior UK government source said.
“While we do not consider this process to be closed, things are looking very tricky and there's every chance we are not going to get there.”
Britain left the EU on January 31 and entered a transition period to allow negotiations to establish a trade relationship with zero tariffs and zero quotas.
“Sand is running out of the Brexit hourglass as the UK seems to have ruled out extending the Brexit transition period,” said market analyst Edward Moya at currency trading platform Oanda.
Beyond Brexit, 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 the shots will begin in January for the most vulnerable.
Amid a surge in cases, two of the three major US equity indices pulled back from Friday's records, but the Nasdaq ended at another all-time high.
New Covid-19 cases in the United States have hit new peaks in recent days, along with rising death rates and hospitalisations.
But equities have still risen to new records as investors make bets based on expectations that wide deployment of coronavirus vaccines will spark a major economic rebound.
Markets also have been cheered by comments from key Washington power brokers in recent days that have boosted the prospects for additional stimulus spending before the end of the year. – AFP, December 8, 2020
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