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Pound plunges as UK threatens to pull out of Brexit talks

Watch: Pound slides as UK warns Brexit talks could collapse

The pound plummeted on Monday, down more than 1% against the dollar and the euro, after it was reported that UK prime minister Boris Johnson is ready to pull out of Brexit talks with the European Union (EU) “within hours.”

“Sterling risks to Brexit no-deal endgames were exposed this morning as the chatter was less optimistic than many of us thought it would be... Moreover, confusion over progress on fishing has clearly unnerved the market,” said Neil Wilson, chief market analyst for Markets.com.

Pound chart: Yahoo Finance
Pound chart: Yahoo Finance

By midday, the pound against the US dollar bounced back slightly but was still massively down on the news as the EU’s chief Brexit negotiator Michel Barnier allegedly set a Wednesday deadline for Brexit negotiations:

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The Sun said Johnson will call time on a Brexit-deal if Brussels refuses to budge from their “outrageous” demands.

READ MORE: Britain and EU resume Brexit talks as negotiations enter 11th hour

He is today expected to tell the EU “he is not for turning” as he pledges to stand firm against last minute Brexit demands from France. Michael Gove is also set to meet Vice President Sefcovic, his counterpart, on the UK-EU joint committee in Brussels.

Chart: Yahoo Finance
Chart: Yahoo Finance

A source close to the PM told the newspaper: “It really is end game stuff now. If by close of play Monday there is no movement there’ll at least be a question about whether it’s worth carrying on.

"We’re not going to give in to EU demands preventing us taking back control of the rules Britons live under. It’s as simple as that.”

Johnson could address the nation on the latest Brexit update as early as tomorrow evening. But first, he will be speaking to President of the European Commission Ursula von der Leyen at 4pm UK time.

WATCH: Frost: We are working very hard on Brexit deal

Meanwhile, Foreign Office minister James Cleverly insisted a post-Brexit trade deal with the EU is “nearly there.”

“The vast majority of the elements of this agreement have been resolved and we’re now hanging on a small number of important areas where we don’t have agreement,” he said on BBC Radio 4’s Today programme.

“We’re nearly there but we are not quite there yet. And it may well be that we will not be able to resolve this in the timescale we’ve got, but we’re nearly there.”

WATCH: James Cleverly insists there is still time for Brexit deal to be reached

EU’s chief negotiator Michel Barnier is said to have given a “downbeat” and “gloomy” assessment of progress in reaching a post-Brexit trade deal.

“Having heard from Michel Barnier this morning, really the news is very downbeat. I would say he is very gloomy, and obviously very cautious about the ability to make progress today,” said Irish foreign minister Simon Coveney to RTE news.

“There was news last night on some media sources that there was a breakthrough on fishing. That is absolutely not the case from what we’re hearing this morning.”

Brexit negotiators resumed 11th hour talks over the weekend as time ticks away for the EU and UK to bridge some significant differences ahead of the end of the transition period.

Discussions had previously stalled over three of the most contentious issues for both sides — fisheries, ensuring fair competition guarantees and ways to solve future disputes. Neither side has been ready to concede on these sticking points.

READ MORE: Michel Barnier gives ‘gloomy’ assessment of post-Brexit trade deal progress

On Saturday Boris Johnson and European Commission president Ursula von der Leyen had a telephone call lasting more than an hour but acknowledged that there were still “significant differences” on key areas. The pair are scheduled for another call on Monday evening.

Britain left the EU on 31 January, entering a transition period.

Britain fully leaves the European Union on 31 December 2020. The UK is still in negotiations with the EU over a number of issues from trade and migration, to fishing rights. If the UK does not seal a wide range of agreements with the EU, it will be forced into a no-deal — or hard — Brexit.

Sealing trade deals with major economies is high on the agenda for the UK government because it will lose all the favourable conditions with its biggest trading partner — the EU — when it stops being a member.

But the Northern Ireland aspect of the deal, as items like fishing rights, has become a sticking point for negotiations.

READ MORE: Dutch fishing industry weighs up cost of no-deal Brexit

The fear is that without an agreement with the EU, there could be the creation of a hard border with customs, security and passport control between the UK's Northern Ireland and the Republic of Ireland.

It is deemed as unacceptable as it poses a threat to the balance brought by the 1998 peace process that ended 30 years of conflict between Irish Catholic nationalists and pro-British Protestant unionists.

It was just one week ago where UK business secretary Alok Sharma said the nation’s “progress” on sealing a Brexit trade deal with the EU was hopeful.

“I hope that we will end up with a free trade agreement,” he said.

“We have made progress but there is still some way to go and we need to make sure that the EU understands that the UK is a sovereign nation and that’s the basis on which our arrangement with the EU is in the future,” he added.

Watch: What happens if no Brexit trade deal is struck?