The US dollar edged higher against most of the major currencies, and emerging market currencies are heavier. Sterling’s quarter percent drop makes it the weakest of the majors in slow turnover and it was sufficient to record a new 11-month low.

Sterling failed to get much of a lift from last week’s BOE rate hike, which was widely expected. Carney confirmed that a gradual pace of normalization suggests one hike a year may be appropriate. Carney also acknowledged that the risks that Brexit takes place without a deal were too high for comfort, though not the most likely scenario. The UK’s International Trade Minister Fox took it a step further over the weekend and suggest that such a no-deal Brexit was likely and blamed, of course, the EC’s intransigence.

Sterling is testing $1.2950. The next target is near $1.28, which corresponds with a 61.8% retracement of the rally since the flash crash low in October 2016 that Bloomberg puts at $1.1840. The euro, which has its own challenges, is firm against sterling, but below last week’s high near GBP0.8935. The GBP0.8960-GBP0.8970 area has turned it back twice in the past six months.

The Italian government fiscal plans, which were such a concern last week have eased today. Italy’s 10- year benchmark yield is off 4.4 bp today, the most in Europe, putting more space between in at the 3.0% threshold. The two-year yield is off nearly seven basis points to slip below 90 bp. There has not been much news to account for the reversal, but the coming clash with the EU may not be for a couple more months.

Meanwhile, the surprise of the day comes from Germany. June factory orders dropped a heady 4%–eight-times larger of a decline than the median in the Bloomberg survey forecast, and enough to push the year-over-year rate below zero for the first time in two years -0.8%).Officials cited uncertainty from trade and the silver lining is that since June, the US and EU found a way to lift some of the uncertainty (no new tariffs during new negotiations) without doing anything concrete.