/Sterling drops as fears rise over risk of no deal
Sterling drops as fears rise over risk of no deal

Sterling drops as fears rise over risk of no deal

A lorry passes through security at the Port of Larne in Co Antrim, Northern Ireland on December 6, 2020.

PAUL FAITH | AFP | Getty Images

LONDON — Sterling extended losses against the U.S. dollar on Monday, amid escalating fears that U.K. and EU negotiators may fail to reach a deal before a transition period ends later this month.

The U.K. currency traded at $1.3230 during morning deals, down 1.5% for the session.

Talks between the U.K. and European Union are due to resume later in the day, with British Prime Minister Boris Johnson expected to speak to European Commission President Ursula von der Leyen.

Both sides are trying to iron out the terms of a prospective post-Brexit trade deal. The U.K. and EU have cited progress in some areas, but differences remain on fishing rights, the so-called “level playing field,” and how future disputes may be resolved.

The level playing field refers to standards the U.K. must adhere to in order to export to the bloc.

The U.K. left the European Union in January but agreed to continue following EU trade rules until the end of the year so both sides could come to a new trade agreement. However, negotiations have dragged on for months, and as the end of the year looms there are growing concerns that talks could collapse without a deal.

In this scenario, exporters on both sides would face higher costs and barriers in their day-to-day business.

— CNBC’s Silvia Amaro contributed to this report.