Sterling dropped as reports of insufficient progress made in the latest round of Brexit talks cast doubt on a withdrawal agreement being reached at an EU summit scheduled later this week.
"A lot of work remains to be done," the European Commission said in a brief statement following "constructive" technical-level talks with the U.K. over the weekend. Negotiations will continue Oct. 14.
The pound fell 0.24% against the dollar as of 6:40 p.m. ET on Oct. 13, while the euro rose 0.05% against the British currency.
The U.K. proposed a planned dual customs system for Northern Ireland that would see different treatments applied for all goods entering the British territory depending on their final destination in the country, the Financial Times reported. That plan would mean Northern Ireland remains in the U.K.'s customs area while also technically avoiding a hard border separating the British territory from the Republic of Ireland, the paper said.
But Michel Barnier, the EU's chief Brexit negotiator, told ambassadors of the bloc that the plan was too complex, the FT said. Barnier also said the U.K.'s plan falls short of the standard to form the basis of a withdrawal agreement with the EU, Bloomberg News reported, citing two officials familiar with the matter.
The U.K. has just over two weeks until its scheduled exit from the EU on Oct. 31. British Prime Minister Boris Johnson must clinch a withdrawal agreement with Brussels by the end of a two-day European Council summit beginning Oct. 17, as failure to do so will require him to ask for a Brexit extension to Jan. 31, 2020, unless the country's Parliament agrees to leave the bloc without a deal.
The slow progress in Brexit negotiations cast doubt on the U.K. and EU clinching a divorce deal at the upcoming summit, the FT wrote, citing diplomats. It also raises the possibility of a special summit being held right before the U.K.'s scheduled departure.
