GBP/USD: Recovery appears shallow as UK PM May set to renegotiate with EU

• UK PM May to renegotiate the Irish backstop with the EU, as Brady’s amendment was approved.  
• EU likely to reject May’s new plan, Cable could drop further to 1.3000.
• All eyes on FOMC decision ahead of the UK-EU renegotiation.

The recovery in the GBP/USD pair from weekly lows of 1.3058 lost legs just shy of the 1.31 handle, as the bears keep the upside attempts capped amid the return of the Brexit deal-related uncertainty.  

On Tuesday, the Cable came under heavy selling pressure and eroded nearly 150 pips from the 1.3200 levels after the UK Parliament rejected the one of the most relevant amendment vote, the one called Cooper ´s amendment got defeated by 298 to 321. However, the bulls were offered some reprieve after Brady’s amendment was approved.

“The final vote was for Brady’s amendment, which proposed replacing the backstop with “alternative arrangements to avoid a hard border, something the EU is not willing to do, was approved,” Valeria Bednarik, Chief Analyst at FXStreet noted.

The final vote approval opened the doors for the UK PM May to renegotiate the backstop with the European Union (EU). But markets remain skeptical whether the EU would be interested in the re-opening of the Brexit deal, as several EU officials have already expressed their unwillingness to renegotiate the backstop agreement.

All in all, the spot remains vulnerable going forward. However, a dovish Fed could offer some temporary relief, should the Fed underscore rate pause risks and the greenback wilts thereafter.

GBP/USD Technical Levels