EU warning PM Johnson has less than two weeks to save post-Brexit trade talks – The Times

The UK Times has reported that Boris Johnson, the UK's PM, has been warned he has less than two weeks to save post-Brexit trade and security talks.

Key points

• Michel Barnier and David Frost, the UK's chief negotiator, will hold emergency talks next week in an effort to save the negotiations, The Times understands.
• Mr Barnier, the EU's chief negotiator, told the government last week that negotiations will not move forward until Mr Frost explains what Britain's future policy will be on industrial subsidies.
• In an angry response, the prime minister's negotiator hit back, telling the French former European commissioner that Britain would not draw up such a key economic policy on a "timetable dictated to" by the EU.

Market implications

It's not looking favourable for overstretched sterling positioning for which data will be released tomorrow for the week ending the 25th. 

The week ending 18th saw broad-based buying.in both GBP and EUR, although the weakness in the US dollar could well be masking the vulnerabilities in sterling pertaining to Brexit risks. 

Negotiations are not going well. In fact, Germany has scrapped plans to discuss Brexit at a high-level diplomatic meeting next week because there has not been “any tangible progress” in talks.

 “Since there hasn’t been any tangible progress in EU-UK negotiations, the Brexit item was taken off the agenda,” an EU diplomat said.

Angela Merkel was billed as a potential dealmaker when talks on the UK-EU future relationship reach a crucial stage this autumn, so this is an alarming situation.

So far, GBP has paid little heed to such risks, but today's speech from the Bank of England's governor, Andrew Bailey will be the biggest item on the diary for traders.

It will be watched in case there are any indications of tweaking of policy and mention of negative interest rates. 

Brexit is by far the greatest threat to the pound and with the October deadline looming, the pound is likely to struggle.