The British pound reversed early gains on Tuesday, falling by more than a cent against the dollar to an intraday low as the U.K. government's top lawyer said the risk of being trapped indefinitely in a customs union with the EU remained unchanged, despite marginal concessions made by the EU Commission late Monday.
GBP/USD was down 1.01% to 1.3015 by 07:32 AM ET (11:32 GMT), after rising as high as 1.3288 earlier in the day.
The pound fell after U.K. Attorney General Geoffrey Cox said the tweaks to the withdrawal agreement hammered out over two years by the U.K. and EU did not eliminate the risk that the U.K. could be trapped in the so-called Irish backstop indefinitely, despite assurances from Prime Minister Theresa May.
"The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have ... no internationally lawful means of exiting the Protocol's arrangements, save by agreement," Cox said.
The advice came ahead of a parliamentary vote on the divorce deal later in the day.
May said Monday that she had secured "legally binding changes" to her Brexit deal, which addressed concerns over the Irish backstop, an insurance policy designed to avoid a hard border in Ireland.
The euro rallied against the pound following the advice, with EUR/GBP jumping 1.16% to 0.8646.
