This morning a UK government minister suggested negotiations could be extended if a deal isn’t struck before the deadline.
But reports emerged later in the day that talks over the weekend had been “quite difficult” with “massive divergences” remaining between both camps.
Sterling was flat against the dollar to trade at $1.3331. It was also basically flat against the euro, sitting at 1.1128 at 12.50pm on Monday in London.
If good progress is made this week the talks could continue into the new year, environment secretary George Eustice said on Monday.
“We really are now running out of time, this is the crucial week, we need to get a breakthrough,” he told Sky.
“I really do think we are now in to the final week or 10 days, of course if great progress were made this week and you’re nearly there it’s always possible to extend those negotiations.”
As the clock ticks down to the official deadline of 31 December, both sides are demanding concessions on fisheries, state aid and how to resolve future disputes.
“There are some rumors in the market that the EU block may finally accept the UK's proposal on fisheries. This means that the transmission period on Fisheries may be allowed,” said analysts at Avatrade in a morning email.
“If the rumor is true, this will be a big deal for Brexit as fisheries have been the most disturbing topic between the EU and the UK, and if any one of them can move or show flexibility on these, we could see the grid lock breaking up which has been there for several months.”
Watch: What happens if no Brexit deal is struck?
Over the weekend Dominic Raab emphasised that Britain’s position as “an independent, coastal state” meant it must be able to control its waters but added that there could be a transition period for an agreement over fishing rights.
"We can talk about transitions and things like that and we recognise the impact on other countries round Europe," he said.
Although Britain officially left the EU in January 2020, the post-Brexit transition period ends on 31 December.
If no agreement is made, trade will default to World Trade Organisation (WTO) rules — a move which would impact borders, spook financial markets and disrupt delicate supply chains that stretch across Europe and beyond, particularly at a time when the world is grappling with COVID-19.