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  • GBP/USD moves to the sub-1.2100 region, daily lows.
  • GBP weaker as general elections, no deal, ‘no confidence’ vote weigh.
  • UK Manufacturing PMI deteriorated to multi-year low in August.

GBP/USD is adding to Friday’s losses and is now recording new daily/weekly lows in the vicinity of 1.2080.

GBP/USD attention stays on politics

The Pound trades well on the defensive at the beginning of the week following increasing political uncertainty in the country, already sheeding more than two cents since last week’s tops beyond 1.23 the figure.

Cable is therefore expected to remain under scrutiny this week amidst growing debate on the recent suspension of the Parliament by PM B.Johnson, who might face a probable ‘no confidence’ motion while investors have already started to price in the probability of general elections.

Also collaborating with the offered tone in GBP, the manufacturing PMI came in at 47.4 for the month of August, the lowest reading since October 2012.

What to look for around GBP

The recent move by PM Boris Johnson to suspend Parliament has given way to heightened uncertainty in UK politics and boosted odds of a ‘no deal’ scenario on October 31. Supporting this view, opposition MPs seems to be losing the battle to avoid a ‘hard divorce’ while investors have started to factor in the chances of general elections. On another direction, there are no changes nor fresh news from the BoE’s stance towards Brexit. It is worth recalling that, at its last meeting, the central bank refused to incorporate the likeliness of a ‘no deal’ scenario to its projections.

GBP/USD levels to consider

As of writing, the pair is receding 0.62% at 1.2086 and a breakdown of 1.2014 (2019 low Aug.12) would expose 1.1985 (2017 low) and finally 1.1904 (October 2016 ‘flash crash’). On the other hand, the initial resistance lines up at 1.2309 (monthly high Aug.27) seconded by 1.2364 (55-day SMA) and then 1.2573 (100-day SMA).