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 their future relationship to improve. construction.

Barnier told the European parliament that the path to an agreement was “very narrow”, and British Prime Minister Boris Johnson said that Britain’s door was open but that the EU should see awareness and compromise.

“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.

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

Sterling weakened as low as $ 1.3489 and stood at $ 1.3505 before 1334 GMT, down 0.6% on the day.

Against the euro, sterling fell 0.4% at 90.71 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 contract, ”ING analysts wrote in a note to delegates, adding that an agreement could still be agreed over the weekend.

US investment bank JPMorgan said the probability of a trading contract has gone up to 70% from 60%.

Meanwhile, Bank of England policymaker Gertjan Vlieghe said the central bank may need to cut interest rates below zero to get the economy back on track, according to Bloomberg TV.