“¢ Brexit uncertainties continue to weigh heavily on the British Pound.
“¢ A strong follow-through USD buying aggravates the selling pressure.
The GBP/USD pair remained heavily offered through the early European trading hours and was now seem to extend the downfall further below mid-1.2800s.
The pair’s attempted intraday rebound met with some fresh supply near the 1.2945-50 region and negative Brexit headlines provided bearish traders with a reason to regain their dominant position for the third consecutive session on Monday.
The British Pound crashed across the board in wake of mounting Brexit uncertainty, especially after the weekend report that four more ministers, who backed remaining in the EU, could resign in the final phase of Brexit negotiations.
The report also mentioned that the EU rejected the UK PM Theresa May’s plan for an independent mechanism to oversee Britain’s departure from any temporary customs arrangement it agrees and further collaborated towards denting sentiment surrounding the British Pound.
May’s Brexit plan was also facing opposition from Brexiteers, pro-Europeans, the Northern Irish party, and even some of her own ministers, and risks being voted down by parliament, increasing possibilities for a potentially chaotic no-deal Brexit.
Meanwhile, a strong follow-through greenback buying interest, lifting the key US Dollar Index to over 17-month tops, further aggravated the selling pressure on the first day of a new trading week and contributed to the pair’s slide to an intraday low level of 1.2827.
Technical outlook
Mario Blascak, FXStreet’s own European Chief Analyst explains: “Technically the GBP/USD currency pair reversed the last week’s attempt to break higher as Brexit optimism faded away. The technical oscillators are pointing lower and the Slow Stochastics made a bearish crossover in the overbought territory. The GBP/USD currency pair opened with the gap on the downside and in the wave of Brexit uncertainty is likely to target 1.2800 first before falling towards 1.2662 cyclical low.”
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