Pound slides 1% after Boris Johnson signals tough stance in EU trade talks - 'The scene is set for a showdown'
- The British pound dropped 1.1% against the dollar and 0.9% against the euro on Monday.
- The decline came after Prime Minister Boris Johnson signaled the UK would take a tough stance in exit talks with the EU.
- Johnson's comments fueled fears the UK could end the 11-month transition period without a trade deal in place.
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The British pound dropped on Monday after Prime Minister Boris Johnson signaled the UK would take a tough stance in exit talks with the European Union, fanning fears the country could end the current 11-month transition period without a trade deal in place.
Sterling fell 1.1% against the US dollar and 0.9% against the euro as traders reacted to the increased risk of economic disruption. The currency had rallied last Friday, after Britain officially left the EU and the Bank of England held interest rates steady.
"There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar any more than the EU should be obliged to accept UK rules," Johnson said.
In contrast, EU authorities have called for the UK to create a "level playing field" for European competitors if it wants to access EU markets without tariffs or quotas.
"The scene is set for a showdown and a rocky path for negotiations," Neil Wilson, chief market analyst for Markets.com, said in a morning note. "Britain won't align; the EU demands it."
