The British pound extended declines against the dollar after the UK reportedly rejected the EU’s latest offer on the backstop. Earlier reports suggested the EU offered that they would allow the Irish backstop to apply only to Northern Ireland and not the entire UK. Cable was lower earlier in the session after EU Brexit negotiator told ambassadors that no progress was made in Brexit talks and that they made two new proposals to the UK on the backstop.
The weakness in the pound is overpowering the broad US dollar selloff that stemmed from the disappointing US employment report. The worst performing currency on the session is now British pound and volatility is expected to pick up ahead of next week’s UK Parliament votes.
Today’s offer from the EU does not come close to meeting PM May’s demands and suggest that so far not enough changes will be made to her Brexit deal to stand of chance of passing Parliament. The next key date is the March 12th deadline for May’s final deal to be voted on. If that fails, the next day will have a vote on a no-deal Brexit, and possibly to vote on an extension on March 14th. Several other potential outcomes still exist, including a hard exit, a second referendum and an orderly exit with a slight delay.