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Pound Slides Ahead Of May-Junker Meeting

The pound declined against its major counterparts in early European deals on Wednesday, as the UK Prime Minister Theresa May is set to meet the EU Commission chief Jean-Claude Juncker in Brussels for further Brexit negotiations.

Juncker dampened hopes for any breakthrough in talks on Tuesday, saying that there are no enough signs of progress on Brexit to expect the meeting to be productive.

The U.K. will depart from the European Union on March 29 but has yet to strike a deal outlining divorce terms and future trade rules.

There are rumors that three Tory lawmakers are set to quit the Conservative Party as early as Thursday and join the "Independent Group" of eight former-Labour MPs.

Anna Soubry, Sarah Wollaston and Heidi Allen are reportedly planning to resign from the Tory party amid divisions in handling of Brexit and general direction of the party.

European stocks held steady as hopes for a Sino-U.S. trade deal continued to build and British Prime Minister Theresa May ditched a radical Brexiter plan to save her EU exit deal.

Investors also awaited the Federal Reserve's policy meeting minutes due later in the session for clues on policymakers' thinking on interest rates and its balance sheet reduction policy.

The currency was higher against its major counterparts in the Asian session, excepting the euro.

The pound declined to 1.3026 against the greenback, from more than a 2-week high of 1.3076 hit at 8:45 pm ET. The next possible support for the pound is seen around the 1.29 level.

Having advanced to a 2-1/2-month high of 145.04 against the yen at 8:45 pm ET, the pound reversed direction and dropped to 144.32. The pound is poised to target support around the 141.00 level.

Data from the Ministry of Finance showed that Japan logged a merchandise trade deficit of 1,452.2 billion yen in January.

That missed expectations for a shortfall of 1,029.5 billion yen following the 56.7 billion yen deficit in December.

The pound edged down to 1.3038 against the franc, after rising to a new 3-week high of 1.3088 at 8:45 pm ET. If the pound drops further, 1.29 is likely seen as its next support level.

The U.K. currency reversed from an early high of 0.8676 against the euro, falling to 0.8712. Next likely support for the pound is seen around the 0.89 area.

Figures from the Federal Statistical Office showed that Germany's producer price inflation eased for a second straight month to its lowest level in eight months in January.

The producer price index rose 2.6 percent year-on-year in January, following a 2.7 percent in December. Economists were looking for 2.20 percent inflation.

Looking ahead, at 10:00 am ET, Eurozone flash consumer sentiment index for February is due.

The Fed will release minutes from January 29-30 meeting at 2 pm ET.

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