By Yasin Ebrahim
Investing.com – The pound is on track for its biggest weekly slump in nearly six months Thursday as the EU threatened to pursue legal action against the U.K. if it doesn’t drop a bill that aims to undermine the Brexit divorce agreement.
GBP/USD fell 1.56% to $1.2799, and remains on track to post its largest weekly slump since March 15.
The EU demanded the U.K. drop its internal market bill by the end of the month or risk jeopardizing negotiations and legal action.
The bill, published on Wednesday, seeks to create common rules that apply across the whole of the U.K. including England, Northern Ireland, Scotland and Wales. It would likely clash with key terms of the withdrawal agreement requiring that Northern Ireland, in the post-Brexit period, follow EU rules in order to avoid a hard border with the Republic of Ireland.
Cabinet minister Michael Gove insisted the country will not withdraw the bill.
The acrimonious shift in relations comes just days after Prime Minister Boris Johnson said Britain would walk away from talks if there was no agreement in place by the Oct. 15 deadline, when European Council is set to convene.
With both sides seemingly content to dig in their heels, hopes of some progress in the latest round of trade talks are fading, while the prospect of the U.K. leaving the EU without a deal, a “hard Brexit,” grows by the day.