Brexit Envoys Scramble For Compromise, UK PM Sees Tough Winter Ahead

GBP trades on a slightly softer footing at the start to the week, looking past Saturday's call between EU Commission Pres von der Leyen and UK PM Johnson, who extended Brexit negotiations by one month and noted that progress made to date justifies a renewed push to strike compromise.

• A joint statement from both leaders underscored their belief in reaching agreement on the key sticking points and noted that they instructed respective envoys to intensify negotiations. Words of optimism masked the lingering stalemate, with source reports pointing to a hard-line stance of French Pres Macron as a key hurdle.
• On Monday, EU chief negotiator Barnier will speak with German Cll'r Merkel. He will then travel to London to meet with his UK counterpart Frost, before the pair conducts further talks in Brussels.
• Separately, PM Johnson warned the public of a "very tough winter" ahead and argued that the gov't is trying to find a balance between protecting health and saving the economy amid renewed spread of coronavirus infections. The UK's daily tally of cases skyrocketed over the weekend (reaching >20k on Sunday), as officials added some cases which had previously been overlooked due to a technical glitch. Meanwhile, the Guardian cited a leaked gov't document suggesting potential for the implementation of a harsher, three-tier lockdown system for England.
• UK Cll'r Sunak will address the Conservative Party Conference today, launching a GBP238 package to help people out of job. His speech will be scrutinised for any signals of tensions with PM Johnson, following press reports suggesting as much.
• GBP/USD little changed at $1.2935, as USD struggles too. A dip through Sep 30 low of $1.2806 would expose Sep 28 low of $1.2745. Above Oct 1 high of $1.2978 would open the 38.2% retracement of the Sep 1 - 23 sell-off at $1.2984.
• EUR/GBP last seen at GBP0.9060, a touch higher. A move through Drp 30 high of GBP0.9157 would turn focus to Sep 24 high of GBP0.9181. Bears eye Sep 29 low of GBP0.9044 for initial support, ahead of Sep 28 low of GBP0.9025.
• Final Markit Services/Composite headline the local data docket today. Monthly activity indicators will grab attention on Friday. Central bank speaker slate features Thursday's panel discussion with BoE Gov Bailey & ECB's Schnabel.