STERLING tumbled yesterday as fears of a no-deal Brexit mounted, amid signals from Downing Street in the wake of a call between Prime Minister Boris Johnson and German Chancellor Angela Merkel that an agreement was unlikely.
The pound was, at 5pm last night, trading around $1.2205, down by 1.17 cents on its close in London on Monday. Sterling also lost ground against the single currency. The euro was, at 5pm, trading around 89.71p, up 0.56p on its Monday close in London.
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Mr Johnson, who put new proposals on the controversial Irish border issue to the European Union last week, has pledged the UK will leave the EU by October 31 “no matter what”. Parliament has passed legislation to prevent a no-deal departure.
A No 10 Downing Street source was quoted as saying that a Brexit deal was “essentially impossible”, after the call between Mr Johnson and Mrs Merkel. A spokesman for Mrs Merkel said her office would not reveal details of “private, closed” conversations.
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Norbert Rottgen, chairman of the Foreign Affairs Committee at the German Bundestag, tweeted: “There is no new German position on Brexit. Frankly a deal on the basis of Johnson’s proposals until Oct 31 has been unrealistic from the beginning and yet the EU has been willing to engage. Blaming others for the current situation is not fair play.”
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David Madden, analyst at CMC Markets, noted “fears in relation to Brexit” had hit the pound. He added: “The relationship between London and Brussels has taken a knock. The souring of relations has prompted dealers to dump sterling.”
In a public tweet to Mr Johnson, European Council President Donald Tusk declared: “What’s at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people. You don’t want a deal, you don’t want an extension, you don’t want to revoke, quo vadis?”
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