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Pound Slides On Brexit Worries

The pound drifted lower against its key counterparts in the European session on Tuesday, amid fears over a no-deal Brexit and mounting signs of slowing economy.

Concerns over a no-deal Brexit intensified as Boris Johnson, the front-runner to become Britain's next prime minister, remarked that he would take the U.K. out of the European Union on October 31 "come what may".

"We need a change of direction. That's why we must treat October 31 as a real deadline for leaving the EU, come what may, not a fake one," he wrote yesterday.

Market participants are placing a 95 percent possibility of Johnson becoming PM.

The currency was further weighed by risk aversion, as European stocks fell after losses in Apple shares pressured the broader tech sector on Wall Street overnight and chemicals major BASF warned profits would nearly halve in the second quarter.

Caution prevailed ahead of Fed Chairman Jay Powell's two-day testimony to Congress on Wednesday and Thursday, with markets waiting to see whether the language will be dovish enough after the release of a stronger-than-expected jobs report.

Data from the British Retail Consortium showed that UK retail sales logged its worst June on record.

Like-for-like sales decreased 1.6 percent year-on-year in June, slightly larger than the 1.5 percent fall economists had expected. Total sales were down 1.3 percent.

The currency has been trading lower against its major counterparts in the Asian session, excepting the euro.

The pound dropped to a 4-day low of 1.2381 against the franc, after having risen to a weekly high of 1.2451 at 9:00 pm ET. The next possible support for the pound is seen around the 1.21 level.

Data from the State Secretariat for Economic Affairs showed that Switzerland's unemployment rate remained unchanged in June.

The jobless rate came in at seasonally adjusted 2.3 percent in June, unchanged from May. Economists' expectation was 2.4 percent.

The pound fell to 1.2452 against the dollar, a level unseen so far this year. The pound is seen finding support around the 1.23 region.

Reversing from a weekly high of 136.28 set at 8:45 pm ET, the pound slipped to a 4-day low of 135.50 against the yen. On the downside, 34.00 is possibly seen as the next support level for the pound.

Data from the Ministry of Health, Labor and Welfare showed that Japan total labor cash earnings fell for the fifth straight month in May.

Total cash earnings fell by less-than-expected 0.2 percent year-over-year in May, following a revised 0.3 percent decline in April. Economists had expected a 0.6 percent decrease.

The pound weakened to 0.8996 against the European currency for the first time since January 7. This follows a session's high of 0.8954 set at 5:00 pm ET. If the pound extends decline, 0.92 is possibly seen as its next support level.

Looking ahead, Canada housing starts for June and building permits for May are scheduled for release in the New York session.

Federal Reserve Chairman Jerome Powell will give opening remarks at an event hosted by the Federal Reserve Bank of Boston at 8:45 am ET.

Federal Reserve Bank of St. Louis President James Bullard is set to speak at the Official Monetary and Financial Institutions Forum Meeting in Saint Louis at 10:10 am ET.

At 2:00 pm ET, Federal Reserve Governor Randal Quarles will deliver a speech about stress testing at an event hosted by the Federal Reserve Bank of Boston.

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