FX round-up: Sterling lower as Barnier airs opposition to Chequers plan

Sterling was again on the back foot at the start of the week after the European Union's chief trade negotiator, Michel Barnier, said he "strongly" opposed the Prime Minister's proposal for a "common rulebook" on trade in goods but not on services.

That, Barnier told German daily Frankfurter Allgemeine Zeitung, "would be the end of the single market and the European project."

His remarks saw the pound slide 0.81% lower to 1.1079 in its cross against the euro as of 1628 BST, while against the US dollar it was down by 0.56% to 1.28856.

Nevertheless, analysts at ING were confident that a deal would finally be agreed, although "it may not be well into the new year before we know for sure".

In that regard, the Dutch broker noted how: "there appears to be an incentive for [Prime Minister May] to leave it as late as she can to agree to a deal with Brussels. The later the deal is agreed, the later Parliament will have its vote, and the more binary the choice between the agreement and a ‘no deal’ Brexit will appear."

Meanwhile, in the background, May came under fire at the weekend from both her former Brexit Secretary David Davis and the former foreign policy head, Borish Johnson, which some commentary said might augur either a defeat in parliament later in the year - helped by Davis - or a leadership challenge at the Conservative party conference, later in September.

Also weighing on the pound was a weaker-than-expected reading on British manufacturing, with IHS Markit's factory sector Purchasing Managers' Index slipping from a reading of 53.8 for July to 52.8 in August (consensus: 54.0).

Further afield, in the Emerging Markets space, the Argentine peso was under renewed selling pressure after the government in Buenos Aires announced that it would reimpose withholding taxes on exports as an emergency measure designed to boost fiscal revenues.

The news sent the Greenback 4.52% higher against the peso to 38.5482.

In parallel, the Turkish lira was also seeing some selling, after consumer prices were reported to have accelerated from a 15.8% year-on-year pace for July to 17.9% in August (consensus: 17.6%).

Responding to the news, the central bank in Ankara said it would "adjust" its monetary stance when Turkish policymakers next met, later in September.

But analysts at Capital Economics said an interest rate hike from the monetary authority was likely to be nearer to 200 basis points, instead of the between 700-1,000bp increase that markets wanted to see.

The Greenback added 1.63% to 6.6459 versus the lira.