Brexit Breathes Down Sterling's Neck

GBP/USD has shed 37 pips in early Asia-Pac trade, as main focus turned to Brexit news from over the weekend. Several press reports (as outlined earlier) reaffirmed that negotiations between the UK and the EU remain deadlocked. With both sides showing little to no appetite to budge on the main sticking points (most notably fishing rights and state aid), the FT reported that the UK is planning to unveil legislation that would override parts of the Brexit withdrawal agreement, which could result in the collapse of Brexit negotiations. Mounting Brexit risks have sapped strength from GBP at the start to the week, rendering it the worst G10 performer.

• The Telegraph reported that PM Johnson will set the clock ticking and give the EU just 38 days to reach a Brexit deal (i.e. the deadline would be Oct 15), as both sides are prepared to resume bilateral negotiations on Tuesday.
• Cable last trades at $1.3242 and downside focus falls on $1.3197, which represents the 20-EMA. A break here would allow bears to target Sep 4 low of $1.3176. Conversely, a jump above Sep 2 high of $1.3403 would draw attention to Sep 1 high of $1.3482.
• On the data front, UK docket this week features monthly activity indicators, which will be released on Friday.