European session review: GBP weakens on revived no-deal Brexit worries

GBP fell against its major rivals in the European session on Thursday as negative Brexit headlines made investors reassess risks of a no-deal Brexit. 

Reuters reported, citing the EU sources familiar with the matter, that the EU and UK negotiators failed to close differences in the latest round of trade talks. In addition, the EU launched a legal case against Britain on Thursday for a "breach of the good faith articles in the Withdrawal Agreement." The European Commission (EC) President Ursula von der Leyen stated that action is due to the UK's new Internal Market Bill that undercuts earlier legal commitments made by the British government in the Brexit divorce treaty. Meanwhile, the EU's chief Brexit negotiator Barnier tweeted that "Full & effective implementation of Withdrawal Agreement will always be an absolute priority for the EU".

The Internal Market Bill was approved by the UK's lower house of parliament on Tuesday and moved to the upper house. London has one month to respond to the formal letter submitted by the EC. The UK PM' Boris Johnson's office said that they would respond to the EU legal letter "in due course".

However, the Financial Times' reporter Sebastian Payne tweeted that "despite the EU launching legal proceedings against the UK over the internal market bill, officials in London are increasingly optimistic" that the Brexit deal can be achieved. "Officials with knowledge of the talks say a landing zone on state aid has been identified but “fishing is the last sticking point"," he added.