Pound extends decline on the session amid renewed Brexit pessimism

Cable falls to a session low of 1.3175, testing the low on Friday

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The pressure is starting to build for the pound now as sellers are threatening a further move to the downside, in search of a firm break under the 1.3200 handle.

The Friday low @ 1.3175 is called into question now with some minor support from the swing region around 1.3150-60 next before revisiting the 1.3100 level.

Brexit pessimism is resurfacing as we get the week underway and that is putting pressure on the pound currently in European morning trade.

It is tough to see the situation getting better over the next few days as negotiations continue to go nowhere and both sides are still adamant on maintaining their red lines.

UK PM Johnson set a new deadline for 15 October and one can expect that things will only get moving at the last minute as customary with all Brexit dealings in the past. But as we all also know, deadlines are also meant to be broken in Brexit talks.

The uncertainty surrounding the situation isn’t helping the currency, but also the fact that the virus situation may get worse; after the UK reported its highest daily case count of nearly 3,000 since 23 May on Sunday.

With the furlough program set to expire next month, it also presents another downside risk factor for the pound should the health crisis get worse without any added fiscal support.

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