The pound is paring gains versus the dollar and the euro during early Friday trading following a statement issued by EU leaders last night warning that a post-Brexit deal will be very unlikely unless the UK adopts a more flexible stance. With the ball now in the British court a reaction is expected from Boris Johnson’s government. Whatever happens over the next few weeks, it seems that markets don’t expect a no deal scenario, with the pound remaining very close to $1.30. The brinkmanship adopted by both parts is seen as tactical manoeuvring rather than an unwillingness to negotiate. Still, a bumpy ride is expected for sterling, with each back and forth likely to increase volatility.
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