Sterling declined sharply despite stronger wages data as ‘no-deal’ Brexit fears increased again.

Firm US retail sales data underpinned the dollar on Wednesday with recent data dampening expectations of aggressive US interest rate cuts with mixed comments from Fed officials.

The Euro was undermined by low yields and political doubts with commodity currencies losing ground.

Sterling declined sharply despite stronger wages data as ‘no-deal’ Brexit fears increased again.

Global equities drifted lower amid on-going unease surrounding the trade outlook.

Oil prices declined sharply after failing to hold intra-day gains with a smaller than expected inventory draw also undermining sentiment. Gold lost ground on a firm dollar, but silver posted 4-month highs.

Cryptocurrencies declined sharply with bitcoin sliding below $10,000.

Sterling lost ground ahead of the UK labour market data. UK unemployment held at 3.8% in the three months to May and in line with consensus forecasts. There was a larger than expected increase in the jobless claimant count for June and a smaller than expected increase in employment of 28,000. Headline annual wages growth accelerated to 3.4% from 3.2% and underlying growth strengthened to an 11-year high of 3.6% from 3.4%.

Sterling briefly regained some ground before declining sharply again as negative sentiment dominated. Political concerns surrounding Brexit continued with both Conservative Party leadership candidates stating that the Northern Ireland backstop had to be removed. The UK currency came under renewed pressure following reports that Johnson could trigger a parliamentary recess in late October by scheduling a November Queen’s speech.

There was a GBP/USD slide to 27-month lows just below 1.2400 while GBP/EUR pushed to a 6-month low around 1.1054. There was only a marginal recovery on Wednesday ahead of the latest UK inflation data with speculation over an early General Election also undermining sentiment.

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