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Sterling Dragged Off Perch as Deal Drags

FOREX

GBP fell against all others Wednesday, with reports of a cautious warning from Brexit negotiator Barnier weighing from the off. This pulled GBP/USD off the week's multi-month high of 1.3441, with implied vols running suitably higher also with a deal still making little progress.

The single currency outperformed, with EUR/USD breaking above 1.21 for the first time since mid-2018. Short-end EUR vols also traded at multi-week high as the contracts begin to look ahead to next week's ECB decision.

Trade in haven currencies was inconsistent, with JPY slipping against most others while CHF gained. CHF/JPY rallied sharply for a second sessions, clearing the October high to trade at the best level since September.

Focus Thursday turns to Australian trade balance, final global PMI revisions for November, Eurozone retail sales and ISM services & weekly jobless claims data from the US. BoE's Saunders & Tenreyro and Fed's Bowman & Kashkari are scheduled to speak.

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