GBP/USD drops to fresh 2-week lows, fast approaching 1.2900 handle

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   •  The lack of progress in Brexit cross-party talks continues to weigh on the British Pound.
   •  A modest USD uptick adds to the selling bias below the very important 200-DMA.

The GBP/USD pair kept losing some ground through the early North-American session and has now dropped to fresh two-week lows, fast approaching the 1.2900 handle.

After a brief consolidation, the selling pressure around the British Pound picked up the pace in wake of reports that the UK PM Theresa May will not sign for a permanent customs union – a key demand by the opposition Labour party in the long cross-party talks.

Labour Party’s finance policy chief McDonnell repeated that the customs union was “absolutely” key for them and added that they have not seen any shift from May’s government in talks aimed at breaking the Brexit deadlock, which further dented the already weaker sentiment.

Meanwhile, a modest pickup in the US Dollar demand, coupled with some follow-through technical selling below the very important 200-day SMA further aggravated the bearish pressure and collaborated to the pair’s intraday slide to the lowest level since April 29.

It would now be interesting to see if the pair is able to find any buying interest at lower levels or the ongoing slide marks the end of the recent corrective bounce and the resumption of the prior/well-established bearish trend amid absent relevant market moving economic releases.

Technical levels to watch

As Yohay Elam, FXStreet’s own Analyst writes: “Support awaits at 1.2920 which was a low point earlier. Close by, 1.2905 was a support line in late April and it is followed by the April low of 1.2870. Further down, 1.2830 and 1.2775 are notable.”

“Initial resistance is at 1.2970 that held the currency pair down in recent hours. Close by, 1.2985 served as support in the previous trading range. The next levels to watch are 1.3035 and 1.3050 that held cable down beforehand,” he added further.
 

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