British pound falls as EU reject May’s Brexit proposal

The British pound is trading lower on Friday after the rejection of Theresa May’s Chequers proposal by European Union leaders.

This development has cast doubt on a compromise despite the UK being only months from leaving the EU.

According to reports, EU officials have taken a harder line against May following her insistence that it’s Chequers or no deal. Clearly they believe this is a bluff and haven’t taken to kindly to such a stance so late in the day.

May now faces a tough challenge in returning to the UK ahead of the Conservative party conference no closer to a deal than she was before, leaving her with a massive target on her back as certain colleagues look to position themselves as a better alternative.

The euro is also paring earlier gains after PMIs for September painted a slightly gloomier picture, particularly for the manufacturing sector where trade conflicts, Brexit and falling global demand contributed to a decline in optimism.

Manufacturers are clearly a little nervous about the number of risks for the sector and the volatility and difficulties in emerging markets right now will not be giving them much reason for optimism.

The pound fell by more than half a percent to $1.3179, away from the two-month highs of $1.3295 hit on Thursday.