- EU and UK still far apart on trade negotiations

- GBP heads for soft end to the week

- Expect trade negotiation pressures to build ahead of July 01

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- Spot GBP/EUR rate at time of writing: 1.1440

- Bank transfer rates (indicative): 1.1140-1.1220

- FX specialist rates (indicative): 1.1207-1.1337 >> More information

- Spot GBP/USD rate at time of writing: 1.2356

- Bank transfer rates (indicative): 1.2024-1.2110

- FX specialist rates (indicative): 1.2103-1.2245 >> More information

The British Pound found was flat heading into the weekend amidst sombre global market sentiment and news that EU and UK negotiators were someway off on reaching agreement on some key issues.

Briefing journalists in Brussels following this week's round of talks, EU Chief Negotiator Michel Barnier said the UK was refusing to "budge" despite the "short" period of time in which progress must be made.

The UK and EU have until July 01 to reach a provisional agreement as this is the last possible date for the two sides to agree an extension to negotiations and to the Brexit transition period, making this a crucial deadline on Sterling's calendar.

"We’re not closing door on extension, it’s expressly provided for in the treaty...but we have to decide this jointly before 30th June - it’s at that time the EU would respond to (whether EU should ask for extension)..shouldn’t end up with situation where one side asking," said Barnier.

Barnier expressed concern that progress is yet to be made on selected issues, namely fisheries and a level playing field on UK and EU regulations.

The topic of Brexit has taken a back seat for foreign exchange markets due to coronavirus concerns since late February, but with trade negotiations restarting after a long delay the Pound could start reacting to developments on this front once more.

"GBP dealers should fear July 01, when it will be too late to extend the Brexit transition past Dec. 31, 2020, and GBP would rightly suffer. The UK government has been vehement about not asking for an extension, and the UK parliament won't be able to force one this time, since Prime Minister Boris Johnson's huge Conservative majority will back his decision," says Richard Pace, an options analyst at Thomson Reuters."

The Pound-to-Euro exchange rate was seen trading 0.18% lower on the day at 1.1437 following Barnier's comments while the Pound-to-Dollar exchange rate as flat at 1.2352.

That no progress has been made between the two sides should however not come as a complete surprise to even the most casual of observers, who will have noted from years of Brexit negotiations that deals are only ever struck at the last moment.

Therefore, with two more stages to complete in the current round of negotiations we should not expect any signs of progress until the final week commencing June 01. Failure to make progress by this point would however send a clear warning to markets that the two sides are too far apart to agree a comprehensive free trade deal.

Markets would likely start building up expectations for a World Trade Organization default to the future trading relationship to come into place in January 2021 as a result, which would likely see the Pound come under pressure against the Euro, Dollar and other global currencies.

But the Pound is currently more prone to external drivers than Brexit at present, and the soft end to the week will have more to do with the current bout of negative investor sentiment.

"A risk negative tone has taken hold through major markets as we approach the end of another momentous week. The U.S. pharmaceutical company, Gilead, which had a prospect COVID-19 treatment drug reported that clinical trials had flopped, causing Wall Street to fall back into the close," says Richard Perry, analyst with Hantec Markets.

A potential antiviral drug to treat coronavirus has flopped in its first randomised clinical trial, according to the Financial Times who have been privy to draft documents published accidentally by the World Health Organization.

The Chinese trial showed remdesivir - developed by Gilead Sciences - did not improve patients' condition or reduce the pathogen’s presence in the bloodstream.

Researchers studied 237 patients, giving the drug to 158 and comparing their progress with the remaining 79.

The drug also showed significant side effects in some, which meant 18 patients were taken off it.

The news comes one week after markets rallied on news remdesivir was showing great promise in treading covid-19 symptoms, confirming that there remains no easy medical fix to the crisis and as long as this remains the case we would expect markets rallies to remain subdued and the big recovery to remain elusive.