“¢ The stalemate over Irish backstop issue continues to weigh on the British Pound.
“¢ The latest UK political development further contributed to the recent selling bias.
“¢ Traders seemed unaffected by subdued USD price-action/weaker US bond yields.
The GBP/USD pair remained under some selling pressure for the third consecutive session on Friday and dropped to three-day lows in the last hour, closer to the key 1.30 psychological mark.
After consolidating in a narrow trading band through the Asian session, the pair met with some fresh supply and was seen extending this week’s retracement slide from near three-week tops, levels just above the 1.3100 handle.
The pair failed to capitalize on the recent bullish momentum and remained depressed on the back of the stalemate over the Irish backstop issue, wherein the UK wants to change the legal text while the EU is only willing to provide assurances that it will be temporary.
The sentiment surrounding the British Pound deteriorated further after the European Commission President Jean-Claude Juncker on Thursday told members of the European Economic and Social Committee that he is “not very optimistic” that a no-deal Brexit could be avoided.
Meanwhile, reports that more Labour MPs are likely to quit the party over the next few days/weeks pointed to a breakdown in the UK politics because of Brexit further collaborated to Sterling’s weaker tone on the last trading day of the week.
With Brexit/UK political developments turning out to be an exclusive driver, the pair seemed rather unaffected by a subdued US Dollar demand, amid firming market expectations that the Fed might hold back from raising interest rates any further.
It, however, remains to be seen if bears are able to regain control as the focus now shifts to the UK PM Theresa May’s statement on February 26th and Brexit debate/ meaningful vote in the UK Parliament on February 27th.
Technical outlook
Mario Blascak, FXStreet’s own European Chief Analyst writes: “With the GBP/USD trading at around 1.3020, just above a 200-day moving average (DMA) of 1.2995, further move on the upside is limited by 1.3100. The support is at around 1.3030 and a 200-DMA at 1.2995.”
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