UPDATE 2-"No deal in the desert," EU says of Brexit breakthrough in Egypt

There will be no decisive breakthrough on a Brexit deal when Britain's prime minister meets other EU leaders at a summit with their Arab peers in Egypt at the weekend, an EU official said on Friday. "There will be no deal in the desert," the official said when asked about the chances of a Brexit breakthrough during the EU summit with the League of Arab States in Sharm el-Sheikh on Sunday and Monday.

However, the source said European Council President Donald Tusk would hold a bilateral meeting with British Prime Minister Theresa May on the sidelines of the summit on Sunday. German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte are among more than 20 leaders from the European Union expected to go to Egypt. London hopes May will have a chance there to lobby her fellow EU leaders again for concessions that would unlock Brexit ratification in Britain's divided parliament.

"She will have a period of engagement again on Sunday and Monday with European leaders ... work is continuing at pace to make the kind of progress that we need," May's spokeswoman said. EU diplomats say there has been some movement towards a possible deal with London but stressed that much work remained to be done and were not expecting any imminent breakthrough.

However, sterling weakened on Friday after the EU official ruled out a weekend deal. (Additional reporting by Kylie MacLellan, Editing by Gareth Jones and Susan Fenton)