Pound Cedes Further Ground Against Dollar as Brexit Worries Resurface By Investing.com

  


© Reuters.

By Yasin Ebrahim

Investing.com – The pound extended losses against the dollar on Thursday as signs the U.K and EU relationship remains fragile sowed the seeds of doubt over whether the U.K. will be able to wrap up a post-Brexit deal before the year-end deadline.

The EU said it would sign on with the U.K.’s plan to offer traders a six-month grace period to pay tariffs next year after the Brexit transition period ends.

fell 1.08%, to $1.2419

At the end of the Dec. 31 transition period, the EU said it would impose full customs controls and checks on U.K. goods in 2021, Bloomberg reports.  

The U.K. said that in the first half of 2021, most firms moving goods into Britain would get six months to pay any tariffs due, even if a post-Brexit deal is not reached.

Signs that the U.K.-EU relations still remain fraught with completion has sowed the seeds of doubt over a potential trade deal, cooling some of the recent optimism reported earlier this week.

U.K. Prime Minister Boris Johnson said earlier this week, he would work with the EU to find common ground to break the deadlock. Johnson also claimed that there was no reason why the outline of a Brexit deal cannot be agreed to by the end of July. 

The EU has suggested Oct. 31 as the latest date a deal can be reached to allow ample time for member states to ratify the deal before the end of the transition period.

The fall in the pound also comes in the midst of dovish commentary from the Bank of England.

The Bank of England held rates steady at historic lows of 0.1% and ramped up its bond purchases by £100 billion, as expected.

The central bank said it stands “ready to take further action as necessary” to support the economy and boost inflation to its 2% target.

“The overarching message remains ultra-accommodative with indications of further measures to come to stimulate growth in the second half this year,” Saxo Bank said.

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