Sterling has lost ground this morning after Brexit negotiators failed to make any significant progress over the weekend.
EU chief negotiator, Michel Barnier, said he was “rather downbeat as to the prospects of agreement” and the Sun reported this morning that Boris was ready to pull out of talks “within hours”. This lack of progress has led to some analysts increasing their odds of a no deal outcome, but generally most still feel a deal is the most likely outcome. For example, JP Morgan have now revised their odds of a no deal from 20% up the 33%.
Talks are reported to continue today, with Boris Johnson and the European Commission president expected to review the situation this evening. If successful, then negotiations are likely to continue over Tuesday and Wednesday before EU leaders convene virtually at the European Council meeting on Thursday/Friday. At this point we could see a new final offer being made to the UK.
As a result, the Pound is down around 1% against most of its peers this morning. The market is expecting increased volatility in the Pound this week as Brexit talks near a conclusion and with the transition period finishing in just 24-days’ time.