Johnson ready to scrap Brexit talks 'within hours' - report

The pound dropped against the euro and the dollar after Boris Johnson was reported to be close to pulling out of Brexit trade talks.

The Sun newspaper said Johnson would scrap talks if the EU refused to concede on its "outrageous demands" and that he was ready to announce the move "within hours" if there was no progress on Monday.

A source close to Johnson told the Sun: “It really is end game stuff now. If by close of play Monday there is no movement there’ll at least be a question about whether it’s worth carrying on. We’re not going to give in to EU demands preventing us taking back control of the rules Britons live under. It’s as simple as that.”

The pound fell 1.02% to €1.0971 and 1.3% to $1.3269 as traders reacted to the comments with 25 days left until the end of the UK's trade transition period with the EU.

Johnson has resorted to brinkmanship several times in talks with the EU but time is running out for a deal that needs to be agreed by EU countries. Fishing rights and rules on competition between the EU and the UK are the main sticking points.

Micheal Martin, the Irish prime minister, said the chances of a deal were 50-50 and he was not optimistic. "Things are on a knife-edge here and it's serious," he said. Reports on Friday had suggested a deal could be agreed at the weekend but talks remained blocked.

David Madden, an analyst at CMC Markets, said: "The mood is more cautious now than it was on Friday. This might just be political posturing [by Johnson] as a way to try and gain leverage over Brussels, but dealers have dropped the pound as a result of the tense situation."

More than four years after Britain voted to leave the EU the two sides are at odds with the deadline looming for a trade deal on 31 December. Without a deal Britain would do business with its biggest trading partner under tariffs and restrictions imposed by World Trade Organisation rules.

“At some point everyone has to say the risks are too high to hold any exposure with this yo-yo of optimism and pessimism,” Jordan Rochester, a currency strategist at Nomura, told Bloomberg. “The risk now is that optimism turns to pessimism and we have to hedge for a no-deal Brexit.”