Moments ago, sterling reverted to its familiar downward sliding trajectory and took a steep move lower following a Bloomberg report that German Chancellor Angela Merkel’s government is "battening down the hatches for coming Brexit talks, instructing officials to avoid any back-door contacts that could hand the U.K. an advantage", citing people familiar with the discussions.

According to the report, Merkel’s chancellery is receiving U.K. diplomats but refusing to grant U.K. any favors in advance of the official negotiations. It adds that some government ministries are instructed to shun official contacts with U.K. counterparts that could reveal negotiating positions.

German message in private is same as in public: can’t start discussions before U.K. triggers Article 50 exit clause.

Bloomberg adds that Merkel’s core message to U.K. “has been consistent” - full participation in EU single market means accepting EU’s four freedoms: German govt spokesman Steffen Seibert last week.

GBPUSD slumped as much as 1.227 after trading above 1.23 on ongoing speculation about UK negotiations involving "hard brexit."