Pound hit by another row with EU over Brexit

STERLING fell sharply on global currency markets after Brexit tensions exploded back into the open.

Speaking on the eve of the next round of negotiations with Brussels, Boris Johnson set a five-week deadline to strike a free-trade deal with the European Union.

The Prime Minister said that if an agreement has not been reached by October 15 ‘we should both accept that and move on’ – adding that a No Deal exit when the transition period ends on December 31 ‘would be a good outcome for the UK’.

And in a sign that commitments made in the Withdrawal Agreement that secured Britain’s exit from the EU could be torn up, Downing Street has said new Brexit legislation is necessary to protect the Northern Ireland peace process if a free-trade deal is not forthcoming.

Having hit a two-year high close to $1.35 last week, the pound tumbled back towards $1.31 yesterday. It also fell towards €1.11 having been trading near €1.13 last week.

Susannah Streeter, senior investment and markets commentator at Hargreaves Lansdown, said: ‘Sterling’s dip comes as little surprise amid the ratcheting up of tensions over Brexit.’

Rupert Thompson, chief investment officer at wealth manager Kingswood, said a deal by October 15 ‘will be a tall order with both sides seemingly far apart and digging their heels in’.

He added: ‘While Johnson is still proclaiming that even a No Deal would be a good outcome, the market is almost certainly rather more sceptical.’