July 22, 2020 / 9:30 AM / 23 days ago

Sterling edges lower as no-deal Brexit reports emerge

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

By Olga Cotaga and Joice Alves

LONDON, July 22 (Reuters) - The British pound drifted away from the one-and-a-half month high on Wednesday, amid worries around the Brexit transition period ending without any deal between Britain and the EU.

Sterling was trading down 0.6% versus the dollar at $1.2653 on Wednesday and versus the euro it was 0.5% lower at 91.04 pence. The pound had briefly risen above $1.27 for the first time in six weeks on Tuesday.

“The performance of the pound in recent weeks suggests Brexit risks are starting to play a role,” said Derek Halpenny, head of research at MUFG.

Britain’s exit from the European Union has taken a back-seat this year as the country focused on how to survive the new coronavirus pandemic. But with a transition period due to expire at the end of the year, the clock is ticking for Britain to reach a trade deal with the bloc.

London wants a Brexit free trade deal with the EU but is prepared for no deal, Transport Secretary Grant Shapps said on Wednesday.

That followed a report in the Daily Telegraph that suggested the two sides may fail to sign a post-Brexit trade deal, with only a few days left before Prime Minister Boris Johnson’s July deadline.

The Financial Times reported the British government has also abandoned hopes of clinching a U.S. free trade deal ahead of the presidential election, with officials blaming the novel coronavirus outbreak for slow progress. (Editing by Alex Richardson)

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