Sterling falls below 1.3000 after the UK reportedly rejects the EU’s latest proposals on the backstop

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.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.