- No-deal Brexit fears continue to weigh on the British Pound.
- A pickup in the USD demand added to the intraday selling bias.
- The focus shifts to Johnson’s meeting with Merkel and Macron.
The GBP/USD pair maintained its offered tone through the mid-European session on Monday, with bears now awaiting a follow-through weakness below the 1.2100 round figure mark.
The pair failed to build on last week’s attempted recovery move from the vicinity of the key 1.20 psychological mark and met with some fresh supply on the first trading day of the week in reaction to incoming Brexit-related headlines. The UK PM Boris Johnson reiterated that they will be leaving the European Union (EU) on October 31, with or without a deal.
Brexit headlines continue to influence
This came after PM Johnson’s spokesman said that there cannot be a formal negotiation with the EU until the backstop is dropped and further fueled fears of a no-deal Brexit. Meanwhile, the European Commission spokeswoman told reporters that the EU is prepared for all eventualities and sees no need for further measures to prepare for a no-deal Brexit, which is not the prefered scenario.
The pair quickly retreated around 60-70 pips from an intraday high level of 1.2173 and was further pressurized by a modest pickup in the US Dollar demand, which seemed to extract some support from risk-on mood-led rally in the US Treasury bond yields, albeit absent relevant market-moving economic releases helped bulls to defend the 1.2100 handle, at least for the time being.
It would now be interesting to see if the pair is able to attract any buying interest at lower levels or weakens below the mentioned support to confirm a fresh near-term bearish breakdown as the focus now shifts to PM Johnson’s scheduled meeting with German Chancellor Angela Merkel on Wednesday and French President Emmanuel Macron on Thursday.
Technical levels to watch
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