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Pound Declines As PM Plans Legal Battle On No-deal Brexit

The pound weakened against its major counterparts in the early European session on Monday, following a media report that British Prime Minister Boris Johnson is prepared to launch a legal action in his attempts to ensure Britain can leave the European Union this month with no deal.

The Daily Telegraph reported that the PM is willing to go to the Supreme Court to avoid asking for an extension to Article 50.

The move was aimed to avoid seeking Brexit delay as set out in the Benn Act passed by Parliament.

The PM could give evidence in an attempt to persuade judges in person against forcing him to ask the EU for a Brexit delay.

Figures from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house prices declined unexpectedly in September.

House prices fell 0.4 percent month-on-month in September, reversing a 0.2 percent rise a month ago. This was the first fall in four months. Prices were forecast to rise 0.1 percent.

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

The pound dropped to 1.2287 against the greenback, from a high of 1.2336 seen at 6:00 pm ET. If the pound slides further, it may find support around the 1.21 level.

The pound fell back to 131.31 against the yen, not far from a 4-week low of 131.26 seen at the beginning of Asian session. The currency may locate support around the 126.00 level.

Preliminary data from the Cabinet Office showed that Japan's leading index fell to the lowest level in nearly a decade in August.

The leading index, which measures the future economic activity, fell to 91.7 in August from 93.7 in July. That was in line with economists' expectations.

The pound depreciated to a 5-day low of 1.2216 against the franc from last week's closing value of 1.2274. The next likely support for the pound lies around the 1.20 level.

Reversing from a high of 0.8901 touched at 6:00 pm ET, the pound edged lower to 0.8924 against the euro. Next near term support for the pound is likely seen around the 0.92 level.

Figures from Destatis showed that Germany's factory orders declined at a slower pace in August.

Factory orders decreased 0.6 percent on month, slower than the revised 2.1 percent decline seen in July. Economists had forecast a 0.4 percent drop.

Looking ahead, U.S. consumer credit for August is due in the New York session.

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