By Yasin Ebrahim
Investing.com - The pound moved off session lows against the dollar on Tuesday, but remained under pressure amid concerns about weaker inflation data and fresh worries about a no-deal Brexit ahead of trade talks between the EU and U.S. set for next week.
A top official at Britain’s foreign ministry reportedly said on Tuesday that he expected Prime Minister Boris Johnson to stick with the existing Dec. 31 deadline to reach a post-Brexit trade deal with the European Union, Reuters reported.
GBP/USD fell 1.10% to $1.2298 after hitting a low of $1.2248.
Simon McDonald, permanent undersecretary and head of the diplomatic service at the foreign ministry, said there is "clearly an option" to extend the timeline for both nations to reach a deal beyond the end of the year.
"I believe the prime minister will confirm the existing timetable," McDonald added.
Without a trade deal, Britain risked defaulting to World Trade Organization terms of trade, which many have warned will hurt the economy.
The drop in the pound could extend on Wednesday, however, amid expectations that inflation data expected will show slowing price pressure amid the impact from the Covid-19 pandemic, which has prompted the government to shutter non-essential businesses nationwide.
"The pound could extend its losses on potentially disappointing March U.K. inflation data on Wednesday, BK Asset Management said.
"U.K. inflation data is due for release tomorrow and given the drop in shop prices, the risk is to the downside," said Kathy Lien, head of FX at BK.