Having traded near sessions highs most of the morning session, sterling suddenly tumbled (even if Gilts refused to move) following a Bloomberg report that the UK is said to see Brexit breakdown if the EU refuses to compromise. In immediate kneejerk reaction, GBPUSD plunged 50 pips, to session lows on fears that Theresa May's visit to Brussels will be meaningless and just another opportunity for Juncker to get drunk.

As Bloomberg adds, Brexit negotiations are heading for a "catastrophic breakdown" unless the European Union signals this week that it will allow talks to move on to trade, according to a person familiar with the U.K. government's position. 

While the headline is likely just another trial balloon meant to send a message to Brussles, Bloomberg notes that without a clear sign that negotiations will progress to trade and transition arrangements by December at this week's summit of European leaders, "the entire Brexit process will be in danger of collapse - and senior British ministers are losing faith in the EU's willingness to strike a deal", a Bloomberg source said.