A Brexit deal is “essentially impossible” following a disappointing call between UK Prime Minister Boris Johnson and German Chancellor Angela Merkel, according to a source at Number 10.

Johnson put forward a number of proposals to Merkel during the call, but she made clear that a deal with the new proposals in mind was “overwhelmingly unlikely”.

She added that a deal would not work unless Northern Ireland remained in a customs union with the EU, which has seen talks become dangerously close to breaking down.

The pound reacted as expected to the news, with a 0.5% decline in an hour as it dropped to $1.224.

With the $1.2285 level of support breaking to the downside, the slump in the value of the pound looks like it may continue, with the next stopping point expected to be at $1.20.

From a short-term perspective, the four-hour chart displays a dreaded cross of the 50 exponential moving average and the 200 exponential moving average to the downside, which indicates that momentum is down and a further correction is on the cards.

The FTSE 100 has also struggled since the turn of the month, falling by 3.39% to 7195 as UK companies grow fearful of the increasingly likely potential of a no-deal Brexit.

The UK’s deadline to leave the European Union is October 31, although the UK government is hopeful of reaching a further extension to the deadline, despite Johnson saying he’d rather be “dead in a ditch” than ask for another extension.

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