DUP leaders have said they "could not support" Boris Johnson's Brexit plan as the prime minister heads to Brussels for what could be the UK's final EU summit.
Talks between UK and EU negotiators look set to go down to the wire as the leaders of the 28 member states gather.
But early on Thursday morning, Arlene Foster and Nigel Dodds, leaders of Northern Ireland's DUP which props up Mr Johnson's government, announced they could not fully support the plan.
In a statement, they said: "We have been involved in ongoing discussions with the government.
"As things stand, we could not support what is being suggested on customs and consent issues, and there is a lack of clarity on VAT.
Advertisement
"We will continue to work with the government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom."
Sterling fell 0.5% to $1.2762 following the news, drifting from Wednesday's six-month high.
More from Politics
Any deal thrashed out will not only have to have the agreement of the British government and all EU member states, but will also have to satisfy enough of the disparate factions in parliament for it to pass a Commons vote.
If a deal looks to be on the table then MPs could decide today whether parliament will sit on Saturday after the summit to try and get the UK out of the EU by the 31 October.
Their approval for such a move would allow Mr Johnson to put any deal to MPs in what would be the first Saturday sitting since the Falkland Islands invasion.
The key date for the prime minister is 19 October because the Benn Act, which was passed by MPs trying to prevent a no-deal Brexit, states he must write to Brussels asking for a delay if parliament does not agree to a deal by then.
The likelihood of an agreement appeared to ebb and flow throughout Wednesday.
EU sources told the Reuters news agency that a tentative deal was largely ready, but "overall backing from the British government is needed to launch it all".
Mr Johnson told his cabinet that "there was a chance of securing a good deal but we are not there yet and there remain outstanding issues".
:: Listen to Sophy Ridge on Sunday on Apple podcasts, Google podcasts, Spotify, Spreaker
There was cautious optimism from European leaders, with French President Emmanuel Macron saying: "I want to believe an agreement is being finalised and that we will be able to endorse it tomorrow (Thursday)."
Appearing at a joint news conference with German Chancellor Angela Merkel, Mr Macron added that it was his hope that a deal "can be found in the coming hours".
Meanwhile, Mrs Merkel declared: "We are in the final sprint."
However, even if an agreement is reached in the coming hours, it could still founder on the rocks of domestic politics.
The numbers in the Commons to pass a deal are incredibly tight, with the prime minister having to rely on hardline Brexiteers in the Tory party, such as the European Research Group (ERG), Conservative MPs who have lost the whip, Labour MPs in Leave constituencies and the government's confidence and supply partners the DUP.
The DUP is unhappy with the prospect of a customs border between Northern Ireland and the rest of the UK, as well as issues of consent regarding the suspended Stormont assembly.
Another sticking point in the proposed agreement appeared to be whether EU VAT rates would apply in Northern Ireland.
Leader Arlene Foster earlier poured cold water on suggestions that one of the main stumbling blocks to a deal – Northern Read More – Source
