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Britain's Boris Johnson to travel to Brussels in final push for a Brexit trade deal

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Key Points
  • Sterling continued to fall against the U.S. dollar on Tuesday morning, amid escalating fears that negotiators will fail to reach a deal.
  • British Prime Minister Boris Johnson is set to travel to Brussels this week in a final push to clinch a post-Brexit trade deal with the EU.
  • Both sides remain divided over three issues: fisheries, competition rules and governance of their potential deal.
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LONDON — British Prime Minister Boris Johnson is set to travel to Brussels this week in a final push to clinch a post-Brexit trade deal with the EU.

Johnson will meet European Commission chief Ursula von der Leyen in person after two phone calls between the leaders failed to bear fruit.

"The conditions for an agreement are not there due to remaining differences on critical issues," von der Leyen said late Monday after speaking with Johnson via telephone.

Sterling slides

Both sides remain divided over three issues: fisheries, competition rules and governance of their potential deal. They have been stuck on these three areas since early on in the summer.

Media reports over the weekend pointed to a compromise over fishing rights, but at a meeting on Monday morning, the EU's chief negotiator Michel Barnier denied that was the case. A spokesperson for the U.K. government also confirmed there had been no compromise on the three outstanding matters. The same spokesperson said that time is in "very short supply" with the U.K. ready to negotiate until the very last possible moment, according to Reuters.

Sterling fell sharply against the U.S. dollar on Monday before recovering some losses. It continued to slip Tuesday morning, amid escalating fears that negotiators will fail to reach a deal. The U.K. currency traded at $1.3339 during morning deals, down 0.3% for the session.

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No-deal scenario

The U.K. left the European Union in January but agreed to follow EU trade rules until the end of the year so both sides could establish new trading arrangements. However, negotiations have dragged on for months and there are now concerns that talks could collapse without a deal.

Simon Coveney, the Irish foreign affairs minister, told the Irish Times on Sunday that he would not be shocked if talks were to fall apart. In this no-deal scenario, exporters on both sides would face higher costs and barriers in their day-to-day business.

The latest push to get a deal comes after the two negotiators halted talks on Friday. Johnson and von der Leyen then instructed their teams to give it another go after a phone call on Saturday. The two leaders spoke again on Monday evening.

In what was seen as an olive branch to Brussels, the U.K. government earlier said it would be willing to drop some clauses from a controversial bill that has caused serious tension with the EU.

That bill, if approved, would override parts of the Brexit Withdrawal Agreement — a deal that both sides approved earlier this year which paved the way for the U.K.'s official departure in January. The EU has said it will not greenlight any new trading arrangements before the U.K. government changes its position to fully comply with their previous accord.

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— CNBC's Sam Meredith contributed to this report.