“¢ A goodish USD rebound prompts some fresh selling.
“¢ Investors still digest the latest Brexit development.
“¢ Investors turn cautious ahead of the G7 summit.
The GBP/USD pair finally broke down of its late US/Asian session consolidation phase and has now moved on the verge of breaking below the 1.3400 handle.
Speculations on Thursday, that Brexit Secretary David Davis might resign were suppressed by news that the so-called backstop plan, to avoid a hard Irish border, will be in place by the end of December 2021 and helped the pair to rebound sharply from an intraday low level of 1.3371.
Investors looking past the latest Brexit headlines and in absence of any fresh development, a goodish pickup in the US Dollar demand seems to be the only factor exerting some fresh downward pressure on the major.
This coupled with a global wave of risk-aversion trade, as depicted by a sell-off across European equity markets and retracing US Treasury bond yields further benefitted the greenback’s safe-haven demand against its British counterpart.
It would now be interesting to see if the pair is able to catch some fresh bids at lower levels or continues with its retracement slide as market attention now shifts to the key G7 meeting, starting today in Canada.
Technical levels to watch
Sustained weakness below the 1.3400 mark is likely to get extended further towards the 1.3365 support, which if broken might turn the pair vulnerable to aim towards testing the 1.3300 handle.
On the flip side, momentum back above 1.3430-35 immediate resistance could get extended towards 1.3470 area but is likely to be capped ahead of the key 1.35 psychological mark.
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