Sterling on the defensive as UK adopts........>

FOREX: Sterling on the defensive as UK adopts election footing

-GBP/USD circled fresh cycle lows once again Monday, as speculation the

government will call a General Election as soon as this week reach fever pitch.

It now appears that the PM will face legislation that would block a No Deal

Brexit when parliament reconvenes Tuesday. If the government is defeated in the

vote, it could call a General Election to take place in mid-October ahead of the

EU Council on the 17th. GBP slipped against all others in G10 on the news, with

implied volatility ticking higher across all tenors as political instability

extends.

-Elsewhere, EUR/USD hit new year-to-date lows as manufacturing PMI data was far

from favourable. The protracted process of forming a new governing coalition in

Italy is also weighing, with Five Star Movement party members due to vote on

Tuesday whether a coalition should be formed. If the vote is lost, snap

elections are likely.

-The RBA rate decision, UK Construction PMI, Eurozone PPI and ISM manufacturing

for August are Tuesday's highlights. Fed's Rosengren speaks after the close.