2019.08.2007:10:00UTC+00Pound Declines On Brexit Jitters

The pound depreciated against its major counterparts in the European session on Tuesday, as concerns over a no-deal Brexit rose after the European Union rejected UK Prime Minister Boris Johnson's request to renegotiate the withdrawal agreement and consider alternative way for Irish backstop.

Ahead of his meeting with European leaders later this week, the PM wrote to European Council President Donald Tusk late Monday to remove the Irish "backstop" proposal and replace it with "alternative arrangements."

Johnson warned that the U.K. Parliament is determined to act rapidly should a satisfactory agreement that did not contain the 'backstop' is not reached.

However, Johnson's call for renegotiating the Brexit deal was rejected by the EU.

Investors focused on developments in Italy as Prime Minister Giuseppe Conte faces a no-confidence vote in parliament after hard-line Interior Minister Matteo Salvini pulled the plug on the shaky populist coalition.

Also in focus are the minutes from the U.S. Federal Reserve's last meeting on Wednesday as well as Fed Chair Jerome Powell's speech at the Jackson Hole symposium on Friday.

The Industrial Trends Survey from the Confederation of British Industry showed that UK manufacturing orders decreased at a slower pace in August.

The order book balance rose to -13 percent in August from -34 percent in July. Likewise, the export order book balance improved to -15 percent from -32 percent.

The currency has been declining against its major counterparts in the Asian session.

The pound declined to a 4-day low of 128.38 against the yen from Monday's closing value of 129.30. Next immediate support for the pound is seen around the 125.5 level.

The pound fell to a 4-day low of 1.1821 against the franc, from a high of 1.1909 it touched at 10:00 pm ET. The next possible downside target for the pound is seen around the 1.155 level.

Data from the Federal Customs Administration showed that Switzerland's exports dropped in July.

Exports dropped by real 1.8 percent on month in July, after a 2.5 percent rise in June. At the same time, imports dropped 0.5 percent following a 1.3 percent decline in June.

Following an advance to 1.2138 against the greenback at 11:00 pm ET, the pound reversed direction and reached a 4-day low of 1.2075. The pound is seen finding support around the 1.19 level.

The pound depreciated to a 4-day low of 0.9179 against the euro, compared to 0.9135 hit late New York Monday. The pound is likely to test support around the 0.93 level.

Data from Eurostat showed that Eurozone construction output remained unchanged in June after easing for three straight months.

Production was flat after decreasing 0.5 percent in May and 1.5 percent in April. Building output gained 0.3 percent, while civil engineering fell 0.5 percent.

Looking ahead, at 8:30 am ET, Canada manufacturing sales for June will be released.