Brexit negotiations continue to drive sterling

Sterling volatility has continued this week as the pound again slipped against major currencies following negative remarks over the weekend from Theresa May and Michel Barnier, EU Chief negotiator. After last week's news that the UK and EU may be close to agreeing a deal, sterling had rallied against major currencies, with the pound rising past the exchange rate of $1.3 USD for the first time in nearly a month, consequently leading to underperformance of the internationally focused FTSE 100 index that suffers from a stronger currency. Today, however, these gains in sterling have deteriorated after Mr Barnier said he was strongly opposed to elements of the UK's current Brexit proposal, with Theresa May also commenting that there were lines that the UK would not cross despite recent progress in the negotiations. Today, the pound is down around 0.5% against major currencies and back below the $1.3 USD mark, whilst the FTSE 100 index is outperforming, aided by a weaker currency.