The pound has slipped further from last week’s gains after remarks by Luxembourg Prime Minister Xavier Bettel directed at Boris Johnson.
Sterling fell 0.8% to 1.2408 against the US dollar, after briefly rising above $ 1.25 in early Asian trading – its highest level in nearly two months.
Last week, the pound rose by 1.7%, but on Monday it also weakened by 0.2% against the euro – to 88.68p.
Futures data shows investors have resumed shorting the pound – betting on its decline – after a brief pause.
The pound fell to a three-year low below $ 1.20 earlier this month, but then soared over 4% for a few days.
But in remarks showing that a gulf remains between the British and European Union positions on Brexit, Mr Bettel said the prime minister had failed to propose serious alternatives that would get a deal done.
Mr Bettel said the British leader needed to “stop speaking and act”.
“We need more than just words,” he said. “We need a legally operable text to work on as soon as possible.”
He added that Mr Johnson was seeking to blame the bloc for the “nightmare” of a prospective no-deal Brexit that would also affect EU citizens resident in Britain.
Mr Bettel was standing alone at a podium that had been prepared for both leaders as Mr Johnson left immediately after the meeting amid a loud anti-Brexit protest.
Mr Johnson and his ministers have been talking up progress in negotiations with Brussels, but the EU side has sounded less optimistic, putting the onus on Britain to come up with new, concrete ideas.
Mr Johnson said after a meeting with European Commission President Jean-Claude Juncker that “there is a good chance” of a Brexit deal with the European Union.
He added that he could “see the shape” of an agreement, but it would “require movement” from the EU.
But Monday’s comments indicated that no agreement was in sight despite meetings between Mr Johnson and European Commission chief Jean-Claude Juncker and later Bettel.
Thu Lan Nguyen, a currency strategist at Commerzbank in Frankfurt said: “The fact remains there is still a decent chance of Britain not (being) able to secure a deal, and that is prompting investors to take profits after last week’s rally.”