Mr Barnier’s stark warning took its toll on the exchange rate, preventing the pound from gaining any strength in light of positive UK data.
A series of encouraging UK figures released this week have failed to significantly boost the pound.
Laura Parsons, currency analyst at TorFX, said: “After fluctuating throughout Tuesday in response to the latest data releases from Germany and the UK, GBP/EUR settled around the day’s opening levels of just below €1.120.
“While Germany’s trade surplus increased, the UK’s trade deficit widened unexpectedly.
“More positively for the UK, industrial production, manufacturing production and construction output all increased by more than forecast in August.”
The most notable figures reported were the GDP estimates for the third quarter.
A forecast growth of 0.4 per cent beats the 0.3 per cent recorded in the previous quarter, indicating the interest rate may rise sooner than expected.
Ms Parsons said: “The final British data of the day was the National Institute of Economic and Social Research (NIESR) GDP estimate.
“Although the data was seen to support the chances of the Bank of England (BoE) increasing interest rates in November, the pound failed to push higher against the euro as the EU’s chief negotiator Michel Barnier issued the warning that Brexit is not a game.”
While the pound has failed to impress, the euro is also under pressure due to political turmoil in Spain.
Ms Parsons said: “The euro was also trading cautiously amid reports that the Spanish police are prepared to arrest the Catalan president if he declares independence.
“With no notable data from either the UK or Eurozone set for release today, any political dramas will be the driving force of GBP/EUR movement.”
