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Sterling erases gains as EU ‘concession’ denied

EU officials say report of NI backstop proposal not true

DUP Deputy leader Nigel Dodds and leader Arlene Foster. Photograph: Rebecca Black/PA Wire

Wed Oct 9 2019 - 14:43

Sterling erased earlier gains on Wednesday after the DUP said it would emphatically oppose a reported European Union concession on the Border backstop under any Brexit deal. EU officials said that a report in the Times newspaper in London – which said Brussels was prepared to offer a mechanism for the Northern Ireland Assembly to leave a new so-called backstop after a number of years – was untrue.

Proposals for what happens on the Border after Brexit are the main sticking point preventing London and the EU from agreeing a Brexit withdrawal deal. A senior diplomat dismissed the Times report as “spin” in the negotiations, while another official said that “no bold new offer is coming from the EU side at this stage.”

Sterling had jumped more than 0.5 per cent against the US dollar after the Times newspaper published its report, but the chief whip of the DUP said it would oppose any such concession, sending sterling back down to $1.2210, flat on the day.

Sterling was last up 0.1 per cent at $1.2223, after spiking to as much as $1.2292.

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It also touched highs against the euro of 89.38 pence but was last down 0.1 per cent at 89.81 pence.

Breakthrough

“Sterling had fared better and rebounded this morning but is now falling back again,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London. “This shows that there is a recognition that there isn’t a substantive breakthrough in the Brexit talks,” he said.

Justin Onuekwusi, a fund manager at Legal & General Investment Management, said: “It’s very unlikely we get a hard Brexit on October 31st but the worsening relationship between the EU and UK means the risk of this goes up a little bit.” – Reuters

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