Sterling Lags Peers Amid Brexit Jitters

A flurry of weekend press reports pointing to a continued deadlock in/new risks to the Brexit negotiations undermined sterling from the off. Both parties to the talks showed no willingness to budge on their key demands, with the UK said to be planning to rip up some parts of the current withdrawal agreement, while PM Johnson is expected to set an Oct 15 deadline for striking a deal with the EU. GBP still lags all of its G10 peers as we type.

• Brexit news, in combination with renewed protests & arrests in Hong Kong as well as early weakness in U.S. equity space & oil generated some mild pressure to riskier currencies initially, but this has largely faded away. NZD & CAD continue to trade on a softer footing, but AUD & NOK have firmed up vs. most of their G10 peers.
• NZD may have faced some additional pressure as RBNZ Gov Orr wrote an op-ed, in which he reiterated that the central bank is actively preparing tools such as negative interest rates and direct funding for banks. However, it is worth noting that the piece contained nothing really new or surprising.
• The U.S. observes a Labour Day holiday.
• Chinese trade balance, Japanese Eco Watchers Survey, Australian ANZ job ads, as well as German and Norwegian industrial output data take focus from here.