Forex - Sterling Drops as UK and Spain Fail to Reach Deal Over Gibraltar

The pound was lower on Friday after news that Spain and the UK have not reached a deal on Gibraltar after the UK leaves the European Union.

GBP/USD slipped 0.38% to 1.2828 as of 7:17 AM ET (12:17 GMT).

“My government will always defend the interests of Spain,” Spain Prime Minister Pedro Sanchez wrote on Twitter Thursday night.

Spain previously threatened to veto the draft Brexit agreement scheduled for a vote on Sunday if the two nations could not reach an agreement on over the UK territory.

The Rock, as it’s known by, presents one of many challenges on the deal. The Spanish have asked that the UK provide a solution to the thousands of Spanish workers that cross the border every day.

The euro was also lower, as signs pointed to slowing economic growth in the euro zone. EUR/USD fell 0.44% to 1.1352.

Euro zone business growth slowed much faster than expected this month, according to data from the purchasing managers index (PMI) survey.

The numbers are likely to be of concern to the European Central Bank, which is expected to slow down its asset purchasing program in December.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.14% to 96.722.

Trading in the U.S. is expected to be thin, as markets were closed for the Thanksgiving holiday on Thursday. Stock markets will close at 1:00 PM ET (18:00 GMT) and the bond markets close at 2:00 PM ET.