The British pound sank Friday, boosting London stocks after UK Prime Minister Boris Johnson warned he was ready to walk away from European Union trade talks and prepare for a “no-deal” Brexit.
Sterling slid underneath $1.29 after Johnson accused the EU of failing to negotiate seriously — and declared Britain should “get ready” for an Australia-style agreement based on World Trade Organization rules from January “unless there is a fundamental change of approach” from Brussels.
A Johnson aide ramped up the rhetoric by adding that trade talks are over unless Brussels “fundamentally shifts its position.”
Their comments came after an EU summit this week demanded Britain urgently give ground on fair trade rules to unblock post-Brexit negotiations.
“Sterling fell sharply on comments from PM Boris Johnson calling for the UK to prepare for a no-deal exit in January and accusing the EU of not negotiating seriously,” said Markets.com analyst Neil Wilson.
Analyst Craig Erlam at Oanda commented that “I think the market is broadly taking it for what it is, one final push at concessions from the EU.”
But he added: “It would be terrible for all of this to end without a deal after four years of work and in the midst of a pandemic when businesses are already pushed to the brink.”
Johnson’s comments helped propel the London stock market 1.3 ahead mid session while on Wall Street the Dow had added 0.5 percent minutes after opening.
A weak pound lifts the share prices of companies listed on the FTSE 100 index that make large earnings in dollars.