LONDON: Sterling sank on Tuesday, dipping against a broadly stronger dollar as investors kept an eye on ongoing Brexit negotiations for fresh drivers for a currency that has hovered below the $1.30 mark since September.
Recent reports have shown that the European Union wants more concessions from Britain before entering a last, intense phase of negotiations on future relations following the United Kingdom's departure from the EU. The two chief negotiators, the EU's Michel Barnier and Britain's David Frost, say they are inching towards a deal, though they have underscored that important gaps remain on fishing, level playing field issues and governance.
British Prime Minister Boris Johnson had set a deadline of the Oct. 15 EU summit for agreeing a trade deal and Frost is in Brussels for intensified talks. With no fresh news coming out of the negotiations, sterling was trading in tight ranges. By 1521 GMT, the pound was 0.6% lower to the dollar at $1.2983.
The pound has been only minimally affected this week by labour market data, the Bank of England further weighing the possibility of negative interest rates, and renewed social restrictions in the UK to combat a fresh wave of Covid-19 infections, despite the implications of these factors for Britain's economy.
Sterling traded in tight ranges against the euro on Tuesday, last flat at 90.40 pence per euro. "As we still see no major breakthrough in the Brexit negotiations this week, we think euro-sterling will continue to be trapped in the 0.90-0.92 range," said Kristoffer Kjær Lomholt, Chief Analyst at Danske Bank.
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