Sterling and Irish shares slide ahead of Sunday Brexit talks    

Brexit uncertainty saw the pound go on a rollercoaster ride, and sent stock markets in Ireland and Britain sharply lower.

Flags of United Kingdom and Ireland with a EU flag in the middle. Picture: iStock

One of the country's leading experts on trade tariffs and Brexit said he is pessimistic that the EU and the UK will strike an agreement for a trade deal in Sunday's talks. 

Co-founder of trade consultancy The Linkage Partnership and former head of the Irish Exporters' Association, John Whelan, said his downbeat assessment is based on the difficulties of the sides reaching a compromise on the so-called governance issues over the court or body that will rule over trade disputes arising over tariffs and standards between the EU and the UK into the future. 

It comes as currency markets reflected their increased jitters about the chances of a Brexit bust-up on Sunday.     

Sterling went on a rollercoaster ride earlier today, moving sharply lower to weaken to almost 92 pence against the euro. It gained again to trade at 91.6 pence on late Friday.  

Moves of such a scale are unusual for currencies of a western country, but have nonetheless become something of a new normal for sterling.

The fall in the pound sent stock markets in Ireland and Britain sharply lower.

Many investment banks say that a Brexit deal will be reached at the last minute.

But JP Morgan reduced its estimate for the chances of a deal being reached to 60% from 66%, and bookmakers Paddy Power and Betfair offered odds with a 50% probability of a no-deal, while betting exchange Smarkets saw no-deal odds rise to 58%.

Economists were scrambling to assess the rumours coming from Brussels and Westminster.

"Although the spot market may suggest that investors are relatively sanguine, options markets point to significant concerns," said Jonas Goltermann, senior economist at Capital Markets.

"The difference between the cost of hedging against falls and rises in sterling has widened more than during any of the previous pinch points in negotiations."  

Mr Whelan said that if the talks fail, the UK will likely allow traders, including Irish exporters, to access markets in Britain without imposing tariffs for six months from January. 

He said the problem for Ireland was that it may have to impose EU tariffs on British imports from January 1, unless the EU follows what the British have promised and introduce its own grace period. 

"I suspect that is what the EU will do," Mr Whelan said. 

John Whelan of The Linkage-Partnership.

However, he said the amount of administrative work facing businesses was immense, and many firms will not have the wherewithal to tackle it.

There would also be the issue of deferred tariff duties to be paid, he said, as well as potentially huge price swings if sterling were to slump further against the euro on news of a no-deal Brexit.    

Most Irish shares fell earlier today, with companies most exposed to sterling and a no-deal Brexit suffering the most.

AIB and Bank of Ireland fell by 2.5% and 1.5% respectively, extending significant losses this week amid the fears over the Brexit talks.

Travel and tourism shares fell again also. Ryanair shed over 3%, and Dalata Hotel Group declined by 2%.