Sterling falls as the EU Barnier says there are only hours left for the Brexit deal

LONDON (Reuters) -Sterling fell on Friday, reversing some of its recent gains, after EU chief negotiator Michel Barnier warned there were only hours left to sign a contract reach Brexit trade with London.

The British currency is still on track for its best week since the end of July as market confidence has risen sharply this week in the hope of the European Union and Britain securing a trade deal. at the last minute before the December 31 deadline, when the Brexit transition period ends.

Almost a year after Britain formally left the EU, both sides are in the final leg of post-Brexit trade deal talks.

The pound hit a 2-1 / 2 year high above $ 1.36 this week, but Friday’s trading session was a reminder that both sides still have differing views on how they want to build the post-Brexit relationship.

Barnier told the European Parliament that the path to an agreement was “very narrow”.

“The latest ideas are creating some doubt in markets, but most still see a very similar consensus,” said Adrian Schmidt, head of FX strategy at Continuum Economics.

British Prime Minister Boris Johnson told European Commission President Ursula von der Leyen in a call on Thursday that it now looked very unlikely that an agreement would be reached unless the EU situation changed dramatically. .

Schmidt said Johnson’s latest comments looked like a “last-minute attempt to push out discounts”.

Sterling weakened as low as $ 1.3489 on Friday, before settling at $ 1.3518 at 1051 GMT, down 0.5% on the day.

Against the euro, sterling fell 0.3% at 90.67 pence.

“The pound has recovered from its 2-year highs in early trading today but is still at levels that clearly indicate optimistic optimism on a contract and GBP’s downward risk remains un- higher regulation in case of a deal, ”ING analysts wrote in a note to delegates, adding that a Brexit agreement could still be agreed over the weekend.

Smarkets exchange marketing said contract numbers have not slipped from above 80% earlier in the week, but are still at 70%. They were less than 50% at one level last week.