Pound Sterling Live: Barnier, Varadkar Comments on Irish Border Triggers Recovery

Should the tough rhetoric of the Conservative Party's leadership campaign actually translate into a 'no deal' Brexit, then Sterling could slump another 10-15% says a leading fund manager at the UK's largest mutual insurer.

The British Pound remains fragile in mid-week trade with foreign exchange markets digesting the latest political headlines that suggest a General Election is being considered by Boris Johnson, who is likely to replace Prime Minister Theresa May new Tuesday.

The Pound hit the ropes again Tuesday as the market responded to official employment figures for the month of May, with subsequent price action suggesting investors have all but given hope of seeing the Bank of England (BoE) lift its interest rate anytime soon. 

Today's wage numbers should be an all-out positive for Sterling, but instead we see the Pound-Euro exchange rate hitting a fresh seven-month low while the Pound-Dollar exchange rate is hitting fresh two-year lows.

The Pound was bottom of the developed world barrel for July this last week but is in danger of a further four percent decline over the coming months if the outcome of the ongoing Conservative Party leadership election leads to adverse Brexit headlines, according to analysts at MUFG.

The Bank of England continued prepare the UK for a potential interest rate cut on Friday, July 12, with Monetary Policy Committee member Gertjan Vlieghe saying Threadneedle Street could potentially cut interest rates to boost demand if Britain faces repeatedly extended Brexit deadlines and a slowing global economy.

Comments from Bank of England MPC member Tenreyro add to expectations for an interest rate cut, which should weigh on Sterling going forward.

The release of GDP and other economic data mid-week are being tipped as a potential catalyst for a short-term relief rally in Pound Sterling.