GBP/USD corrects further from 2-month tops, slips below 1.2500 handle

  • Not so encouraging Brexit headlines prompted some aggressive long-unwinding trade.
  • A solid rebound in the US bond yields underpinned the USD and added to the selling bias.
  • Investors look forward to Barnier- Barclay meeting in Brussels for some fresh impetus.

The GBP/USD pair extended its sharp pullback and retreated farther below the key 1.2500 psychological mark through the mid-European session on Friday.
The optimism led by overnight comments from the European Commission President Jean Claude Juncker, saying that there could be a deal by the October deadline, turned out to be rather short-lived and quickly ran out of the steam on Friday in the wake of not so encouraging Brexit-related headlines.

Brexit-related headlines play a key role

The British Pound weakened across the board after EU’s Chief Negotiator Michel Barnier said that it has gone backwards since Britain sent position papers to Brussels two days ago. Barnier is scheduled to meet the UK Brexit secretary Stephen Barclay later this Friday amid some renewed Brexit pessimism.
The sentiment surrounding the Sterling deteriorated further after Irish foreign minister, Simon Coveney was noted saying that there were serious problems due to the change of approach by the UK PM Boris Johnson and there is still a wide gap between both sides on Brexit.
The pair’s intraday slide of over 100-pips, back towards testing 100-day SMA resistance breakpoint, was further fueled by a modest pickup in the US Dollar demand, which now seemed to have found some respite from a goodish rebound in the US Treasury bond yields.
In absence of any major market-moving economic releases from the US, the incoming Brexit-related headlines might continue to act as an exclusive driver of the GBP price dynamics ahead of a scheduled speech by Boston Fed President Eric Rosengren, later during the US trading session.

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