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Britain, EU clash over next Brexit move: sterling rebounds

Monday, October 09, 2017 - 01:50

Britain's pound bounced back on Monday from its biggest weekly drop in a year as markets took heart from Prime Minister Theresa May's promises to ward off challenges to her leadership. But, as Sonia Legg reports, EU negotiators aren't so optimistic about the outcome of a new round of Brexit talks.

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Britain's pound coin is about to change shape and that's a problem for many still using the old design. Some are complaining they haven't been given enough time to switch. It's a similar story when it comes to the country's departure from the EU. A new round of Brexit talks is starting this week - but EU negotiators see no big breakthrough. (SOUNDBITE) (English) CHIEF SPOKESPERSON FOR EUROPEAN COMMISSION, MARGARITIS SCHINAS, SAYING: "There has been so far no solution found on step one, which is the divorce proceedings. So the ball is entirely in the UK court." And that leaves sterling in a spin - recovering 1 percent of the 2.5 per cent it lost last week. (SOUNDBITE) (English) MARKET ANALYST AT CMC MARKETS, DAVID MADDEN, SAYING: "We could see a potential shift in the British pound. And as you saw the back end of last week any talk of Mrs May leaving 10 Downing Street puts pressure in the pound." The possibility of a cabinet reshuffle helped the bounce back, particularly speculation that Foreign Secretary Boris Johnson could be sacked. He's been accused of undermining the Prime Minister. She's been meeting business leaders in the hope of putting a disastrous Conservative party conference firmly behind her. May will attend an EU summit next week but few are expecting any "miracles" when it comes to key divorces issues like the Irish land border and how much Britain pays on leaving. Many UK businesses are just hoping a promised transition deal can be agreed. (SOUNDBITE) (English) BRITISH PRIME MINISTER, THERESA MAY, SAYING: "We want to find a creative solution to a new economic relationship that can support prosperity for all our peoples. We do not want to settle for adopting a model that is enjoyed by other countries." The trouble is that while few doubt no deal would be catastrophic for the UK economy. Britain would lose valuable bargaining power if it ruled that option out.