Brexit: Pound up as UK, EU agree to 'go extra mile' on trade deal

The UK and European Union have agreed to extend Brexit trade talks into this week, although British Prime Minister Boris Johnson said the two sides were "still very far apart" on key issues.

The pound jumped almost one and a half cents against the dollar at $1.336, and nearly one cent against the euro at €1.1 on the news.

European Union Brexit negotiator Michel Barnier on Monday said agreeing a new trade deal was still possible.

“We’ve only been negotiating for nine months, we’ve needed at least five years for all the previous agreements, we are going to give every chance to this agreement... which is still possible,” Barnier told reporters as he arrived to update EU envoys in Brussels on the UK talks.

“A good, balanced agreement. That means two conditions which aren’t met yet. Free and fair competition... and an agreement which guarantees reciprocal access to markets and waters. And it’s on these points that we haven’t found the right balance with the British. So we keep working.”

European Commission president Ursula von der Leyen on Sunday said negotiators would "go the extra mile" to breach the impasse after what she described as a "useful" phone call with Johnson. Significantly no new deadline was set by either side as the Sunday zero hour for an end to talk came and went.

"We discussed the major unresolved topics. Our negotiating teams have been working day and night over recent days," she said.

"We have accordingly mandated our negotiators to continue the talks and to see whether an agreement can even at this late stage be reached."

However, in a separate statement, Johnson said: "The UK can't be locked into the EU's regulatory orbit and we've obviously got to take back control of our fisheries four-and-a-half years after people voted for it."

"So those are the points. I think that it is very clear what the UK is talking about, let's see what we can achieve. But in the meantime, get ready, with confidence, for January 1 - trade on World Trade Organization terms if we have to."

Without a trade agreement, the UK's future relations with the EU will be governed by WTO rules, including the imposition of import duties. A post-Brexit transition period ends on December 31 and British companies have been stockpiling imported EU products, with huge lines of trucks piling up at French border points.

The 27-member EU has been steadfast that the UK would not be allowed to "cherry-pick" rights and obligations in order to keep access to the bloc's massive single market.

Britain is pushing back against EU demands for a "level playing field" on regulation and a mechanism allowing it to issue sanctions if UK and EU law diverge in a way that would give British companies an unfair competitive advantage. There is also disagreement on the symbolic issue of fishing rights.

British Retail Consortium chief executive Helen Dickinson said a no-deal Brexit would leave the UK facing more than £3bn in food tariffs and "retailers would have no choice but to pass on some of these additional costs to their customers who would see higher prices filter though during 2021".

"Moreover, new checks and red tape that will apply from 1st January will create an additional burden for retailers and their customers."

“Retailers are doing everything they can to prepare for all eventualities on 1st January - increasing the stock of tins, toilet rolls and other longer life products so there will be sufficient supply of essential products."

"While no amount of preparation by retailers can entirely prevent disruption there is no need for the public to buy more food than usual as the main impact will be on imported fresh produce, such as fresh fruit and vegetables, which cannot be stored for long periods by either retailers or consumers."