Mrs May was rebuffed by EU chiefs after heading back to Brussels to seek “legal reassurances” on the Irish backstop in order to convince Tory Brexiteers to back her proposal. The Prime Minister was refused any further concessions by European Commission president Jean-Claude Juncker who said there was no further room for renegotiation, but claimed clarification on clauses in the withdrawal agreement could be provided. The backstop in Ireland has proved to be the main point of contention in Brexit talks, with the EU vowing not to drop it as Brexiteer MPs refuse to support any deal which does not contain an exit clause over fears Britain could remain too closely tied to EU rules. On news of the latest Brexit stumbling block, the pound was trading at €1.1105 against the euro after falling from €1.1144 at the open, data from Bloomberg showed at 08:30 GMT.
Against the US dollar, the pound has dropped to $1.2605 after dropping from an open of $1.2643.
The pound had been boosted versus major currencies in recent days after Mrs May won a vote of confidence, effectively seeing off a challenge to her leadership and paving the way for her to storm ahead with Brexit negotiations.
Following her discussions in Brussels, the Prime Minister was critisced by Mr Juncker over an apparent lack of clarity over what she was seeking from the future relationship.
He said: “Our UK friends need to say what they want, instead of asking us to say what we want.
“So we would like, within a few weeks, our UK friends to set out their expectations for us because this debate is sometimes nebulous and imprecise and I would like clarifications.”
He added: “We don’t want the UK to think there can be any form of renegotiation, that is crystal clear.
“We can add clarifications but no real changes.
“There will be no legally binding obligations imposed on the withdrawal treaty.”
European Council president Donald Tusk also took aim at Mrs May as he reaffirmed that there could be no renegotiation.
Labour went on to accused the Prime Minister of having failed to achieve “meaningful changes” to her Brexit deal.
Shadow Brexit minister Sir Keir Starmer called for a meaningful vote on the deal before Christmas.
He said: “It seems that the Prime Minister has failed in her bid to deliver meaningful changes to her Brexit deal.
“We cannot go on like this. The Prime Minister should reinstate the vote on her deal next week and let Parliament take back control.”
Mrs May faces her second day in Brussels today for the EU summit.
Connor Campbell of Spreadex said: “Now that Theresa May has vanquished a vote of no confidence the currency can get back to focusing on the depressing state of her attempts at Brexit.
“Sterling slumped in the face of the latest round of rejections from the EU, May’s desperate attempts to save her deal so far proving pretty useless.”