United Kingdom Prime Minister Boris Johnson speaks at the United Nations (UN) Climate Action Summit on September 23, 2019 in New York City.
Spencer Platt | Getty Images News | Getty Images
Sterling fell sharply against the dollar Tuesday morning with several British media outlets reporting that Brexit talks were close to breaking down.
On Tuesday morning, Sky News reported that German Chancellor Angela Merkel had told U.K. Prime Minister Boris Johnson a deal is “overwhelmingly unlikely,” citing a Downing Street source.
Meanwhile, the BBC said a government official told the broadcaster Tuesday that the EU had not shown a desire to “budge one centimeter” since Johnson submitted new proposals to Brussels last week. The official, who was not named, said a deal was not completely ruled out, but the BBC cited another unnamed source as saying Johnson’s plans were “the only way out.”
By 10:30 a.m. London time, the British pound traded 0.47% lower against the dollar at $1.2235 as the reports emerged.
The U.K. government’s new plans have received a lukewarm reception on the continent. This week was seen as the last in which both sides could try to find an agreement on a Brexit deal, ahead of the U.K.’s scheduled departure date of October 31.
The new proposals would see Northern Ireland (a part of the U.K.) stay in the European single market for goods but leave the customs union. The U.K. said checks on goods going from Northern Ireland to the Republic of Ireland would undergo customs checks away from the border, taking away the need (the government said) for any physical border infrastructure on the island of Ireland. The EU is skeptical over British plans and Merkel reportedly told Johnson in a call Tuesday that Northern Ireland would have to stay in a customs union.
