“¢ Renewed Brexit jitters prompt some aggressive selling on Monday.
“¢ GBP further weighed down by downbeat UK manufacturing PMI.
“¢ A modest USD uptick/trade tensions add to the downward pressure.
The GBP/USD pair held on to its weaker tone through the mid-European session, albeit has managed to recover around 20-25 pips from daily lows.
Last week’s optimism over a preferential Brexit deal quickly faded away after the EU Chief Negotiator Michel Barnier strongly opposed the UK PM Theresa May’s latest Brexit proposal over the weekend.
The pair opened with a bearish gap and was further weighed down by today’s disappointing release of the UK manufacturing PMI, which fell to a 25-month low level of 52.8 in August.
Adding to this, a modest pickup in the US Dollar demand since the early European session exerted some additional downward pressure and dragged the pair to an intraday low level of 1.2863.
Escalating global trade tensions, following the latest disappointment from the US-Canada trade talks, triggered a fresh wave of global risk-aversion trade and benefitted the greenback’s safe-haven status.
The selling pressure now seems to have abated, at least for the time being, as traders seemed reluctant to place any aggressive bets amid holiday-thinned liquidity conditions on the back of the Labor Day holiday in the US.
Moving ahead, this week’s important macro releases, both from the UK and the US, scheduled at the beginning of a new month, along with any fresh Brexit-related news will now be looked upon for some fresh directional impetus.
Technical levels to watch
Immediate support is pegged near the 1.2860-50 region, below which the pair might turn vulnerable to head back towards challenging the 1.2800 round figure mark. On the flip side, momentum back above the 1.2900 handle might continue to confront some fresh supply near the 1.2930-35 region, which if cleared might assist the pair to make a fresh attempt towards conquering the key 1.30 psychological mark.
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