(Bloomberg) -- The pound fell for a third day as Brexit headlines suggested discussions remained deadlocked ahead of an imminent deadline to move talks onto trade.
Sterling erased earlier gains after the Sun reported that Prime Minister Theresa May is to hold Cabinet talks on the government's vision for Brexit next week as ministers have not decided what type of deal to pursue. Foreign Secretary Boris Johnson said that Britain must take back control, suggesting May will continue to face opposition from her Cabinet to softening her Brexit stance. The U.K. currency was also pressured as the European Union said that a Sunday deadline to make progress had not changed.
The one-week measure of volatility against both the dollar and euro jumped to the highest levels since early June as the tenor begins to captures an EU summit scheduled on Dec. 14-15.
“If there's no extension, it looks unlikely a deal will be reached,” said Neil Jones, head of hedge fund sales at Mizuho Bank Ltd. “The market is looking to hedge the pound.”
The pound fell 0.1 percent to $1.3376 as of 12:48 p.m. in London, after earlier gaining as much as 0.2 percent. It was little changed at 88.08 pence per euro. The yield on U.K. 10-year government bonds rose four basis points to 1.27 percent.
Sterling trimmed its decline after Irish Foreign Minister Simon Coveney told lawmakers in Dublin that the government wants to be “helpful.”
To contact the reporters on this story: Charlotte Ryan in London at cryan147@bloomberg.net, Anooja Debnath in London at adebnath@bloomberg.net.
To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Keith Jenkins, Neil Chatterjee
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