- Friday’s not so encouraging Brexit headlines prompted some long-unwinding trade.
- A goodish pickup in the USD demand exerted some additional pressure on Monday.
The USD buying picked up some pace in the last hour and dragged the GBP/USD pair to near one-week lows, around the 1.2425 region in the last hour.
Having failed to capitalize on its early uptick to the vicinity of the key 1.2500 psychological mark, the pair came under some renewed selling pressure for the second consecutive session and was now seen extending the previous session’s pullback from two-month tops.
Resurgent USD demand exerts additional pressure
The recent optimism led by the European Commission President Jean Claude Juncker’s comments, saying that there could be a deal by the October deadline, quickly ran out of the steam on the last trading day of the week in the wake of not so encouraging Brexit-related headlines.
The British Pound weakened across the board on Friday after EU’s Chief Negotiator Michel Barnier said that it has gone backwards since Britain sent position papers to Brussels two days ago. Irish foreign minister Simon Coveney further added that there is still a wide gap between both sides on Brexit.
This coupled with deteriorating risk sentiment, amid growing concerns about the health of the global economy, benefitted the US Dollar’s relative safe-haven status against its British counterpart and further collaborated to the pair’s offered tone through the early European session on Monday.
It, however, remains to be seen if the ongoing pullback is still corrective in nature or marks the end of the recent bullish run amid receding fears of a no-deal Brexit, making it prudent to wait for a strong follow-through selling before positioning for any further near-term depreciating move.
Technical levels to watch
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