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  • GBP/USD witnessed a sharp turnaround from 1-1/2-week tops, around mid-1.2900s.
  • Pessimistic Brexit-related headlines took its toll on the sterling and exerted pressure.
  • A softer tone surrounding the USD failed to impress the GBP bulls or lend any support.

The GBP/USD pair tumbled to fresh session lows, around the 1.2820 region in the last hour, albeit quickly recovered few pips thereafter.

Following an early uptick to over one-week tops, the pair witnessed a dramatic turnaround from mid-1.2900s and was pressured by pessimistic Brexit-related headlines. The British pound started losing ground after EU and UK reportedly failed to close differences in the latest round of Brexit trade talks and remained split on the issue of state aid.

The bearish pressure aggravated further in reaction to the news that the legal action against the United Kingdom is imminent and that a draft “letter of formal notice” has been finalised. The European Commission President Ursula von der Leyen will make a statement on Brexit at 09:00 GMT this Thursday and announce legal action against the UK.

On the economic data front, the UK Manufacturing PMI was revised down to 54.1 for September from 54.3 estimated previously. The data did little to provide any respite to the GBP bulls. Even a softer tone surrounding the US dollar – amid the prevalent upbeat market mood – failed to lend any support to the GBP/USD pair or ease the bearish pressure.

Apart from Brexit developments, traders on Thursday will take cues from the US macro data. The US economic docket features the release of Initial Weekly Jobless Claims, core PCE Price Index and the ISM Manufacturing PMI.

Technical levels to watch