Pound slips further on uncertainty over Brexit transition

LONDON: Britain's pound slipped half a percent against the dollar on Monday, adding to two straight weeks of losses, amid uncertainty around how Britain will help businesses manage the exit from the European Union.

Trade minister Liam Fox said on Sunday Britain may need a transitional agreement to bridge the gap for firms during negotiations with the EU, but it should not "buy back" into too many of the bloc's regulations.

Meanwhile, the Financial Times reported on Sunday that EU Brexit negotiators are insisting Britain agrees to its European divorce settlement before Brussels offers any transitional deal.

Prime Minister Theresa May - who first hinted at the idea of a transitional deal last month - is due to make a statement to parliament on last week's EU summit at 1530 GMT.

"The pound has been dribbling lower as the EU debate trundles on," Societe Generale currency strategist Kit Jukes said.

"The sense you get is that the UK negotiators still want to have their cake and eat it ... and we may have seen most of the optimism that this is going to go well come and go at this point."

Sterling shed 0.6 percent against the dollar to $1.2412 , with the greenback holding close to its highest level in 14 years against a basket of currencies.

The pound has shed nearly 2 percent against the dollar over the past fortnight, and a total of more than 17 percent since June. 24, the day after the Brexit vote.

It lost nearly 0.4 percent against the euro to trade at 84.00 pence on Monday but still remains relatively close to a five-month high of 83.02 pence hit at the start of the month.

The latest data from the Commodity Futures Trading Commission showed investors continued to reduce bets against sterling, with net shorts at their smallest since the third week of September.

"December can be a dangerous month and sterling remains very sensitive to political events," said Simon Derrick, head of currency research at Bank of New York Mellon.

"But sterling is not alone in facing political risks and it makes sense that short positions would be coming off."

With May not invited to a meeting between the other 27 EU national leaders after last week's summit, it is unclear what sort of feedback on the process the prime minister will be able to offer parliament on Monday.

She might be further pressed on media reports, quoting the EU's envoy, that it would take up to 10 years for Britain to negotiate a new trade deal with the EU.