London - The pound fell for the first time in three days against the euro as David Cameron’s negotiations with fellow European Union leaders spilled into a second day.
While the prime minister, who is seeking a deal on the UK’s membership of the bloc that he can sell to British voters, encountered goodwill from his 27 EU counterparts in Brussels, he also ran into resistance from eastern European states over demands for more welfare curbs. Leaders took “a few steps backward on a UK deal.”
Italian Prime Minister Matteo Renzi said as the session broke up after 03:00 in the Belgian capital.
As the summit continues, pound traders’ expectations for six-month price swings against the euro have climbed to the highest since 2011. Cameron had been aiming to seal a deal at the talks, setting him up to announce a referendum as soon as June 23 on his country’s place in the EU. He has said he will campaign to keep the UK in the union if he can secure an acceptable agreement.
Sterling fell 0.2% to 77.60 pence per euro at 08:31. It depreciated to 78.98 on February 11, the weakest since December 2014. The pound was little changed at $1.4332.
With traders already pushing back bets on the timing of a Bank of England rate-increase, the prospect of a vote on leaving the world’s largest trading bloc is causing further concern, helping to push down the pound against all but one of its Group- of-10 currency peers this year.
Even so, UK government bonds are 2016’s best performing major securities in the Bloomberg World Bond Indices, while the nation’s stocks are outperforming other major European markets by declining at a slower pace than their peers.
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