GBP/USD plummets to 1.32 on latest Brexit headlines

• Germany reportedly regards UK PM May’s customs plan as ‘unworkable.’
• GBP/USD quickly  erases over 50 pips.
• Business activity in the service sector in the U.S. remains healthy.

The GBP/USD pair came under a sudden selling pressure in the last hour after a Bloomberg report claimed that Germany was unconvinced by the British PM Theresa May’s customs plan post-Brexit. After dropping to a daily low at 1.3205, the pair retraced a small portion of its recent drop and was last seen trading at 1.3225, where it was virtually unchanged on the day.

Citing sources familiar with the matter, Bloomberg reported that  German Chancellor Angela Merkel’s government was unconvinced by the U.K. Prime Minister Theresa May’s ‘latest attempt at a compromise arrangement for customs after Brexit.

Meanwhile, the monthly report released by the ADP showed that private sector employment grew by 177K from May to June to fall short of the market estimate of 190K. On the other hand, service sector PMI data released by Markit and the ISM both showed that the business activity in the sector continued to expand at a robust pace in June.

Later in the session, the FOMC is going to publishing the minutes of its June meeting.  “Minutes may contain further clues on how the Fed might react should the upward pressures on the EFF rate continue. If the Fed delivers according to the dot plot, we expect the fair value of the 10yr Treasury yield to rise to the range of 3.25%-3.50%, once/if the trade war fog dissipates. We still see signs that the USD could continue to perform in the current environment,” Nordea Markets analysts argue.

Technical levels to consider

The pair could encounter the first support at 1.3200 (psychological level) followed by 1.3150 (Jun. 19 low) and 1.3050 (Jun. 28 low). On the upside, resistances are located at 1.3275 (daily high), 1.3335 (50-DMA) and 1.3415 (Jun. 5 high).