Sterling recorded its steepest loss against the dollar in seven weeks on Thursday after British and European Union sources said Brexit negotiations had hit an impasse.
Nothing suggests anything will change in Britain’s Brexit talks with the European Union over the next 48 hours, a government source said on Thursday, adding that the EU was simply not moving.
EU Brexit negotiators rejected the latest proposals on the Irish backstop presented by Britain’s Attorney General Geoffrey Cox in Brussels on Tuesday and told him to rework them and come back on Friday, EU diplomats said.
The pound fell to $1.3075, down 0.73 percent, marking its biggest one-day drop against the greenback since Jan. 18. It touched $1.3067, the lowest level since Feb. 25.
Against a weaker euro, it gained 0.37 percent at 85.55 pence versus the euro after the European Central Bank delayed a possible interest rate increase until 2020 and will restart a program to make cheap loans to banks.
In afternoon U.S. trading, Bloomberg, citing people familiar with the EU side of the Brexit talks, reported the EU offered a proposal aimed to make the Irish backstop more acceptable among British lawmakers in a bid for them to approve a Brexit deal. But EU’s latest offer falls short of what Britain wants.
Most economists in a Reuters poll thought Brexit would be delayed by a few months and the two sides would eventually agree to a free-trade deal, according to the poll conducted between Feb. 28 and March 5.