GBP/USD plummets to daily lows, around mid-1.3000s

• GBP/USD remains heavily offered on Monday amid renewed Brexit concerns.
• Recovering US bond yields underpinned the USD and added to the selling bias.

The selling pressure surrounding the sterling remained unabated through the mid-European session on Monday and dragged the GBP/USD pair to daily lows, around mid-1.3000s in the last hour.

As investors looked past last week’s hawkish BoE decision, the pair failed to capitalize on Friday’s positive move to over three-week tops – levels just above the 1.3200 round-figure mark – and opened with a modest bearish gap on the first day of a new trading week.

GBP/USD weighed down by a combination of factors

Uncertainties about the UK’s talks with the European Union (EU) turned out to be one of the key factors weighing heavily on the British pound. Meanwhile, the latest leg of a sudden drop over the past hour or so followed the UK Prime Minister Boris Johnson’s comments.

During a scheduled speech on future trade relationship with the EU, Johnson said that we will not engage in a cutthroat race to the bottom on trade. We have made a choice and we want a comprehensive free trade agreement like Canada, Johnson added further.

Given that the pair on Monday largely ignored slightly better-than-expected final UK Manufacturing PMI print, the comments did little to provide any respite, rather dented the already weaker sentiment and aggravated the intraday selling bias.

On the other hand, a modest rebound in the global risk sentiment allowed the US Treasury bond yields to stage a solid recovery on Monday, which eventually assisted the US dollar to regain strong positive traction and further collaborated to the weaker tone.

Moving ahead, market participants now look forward to the US economic docket – highlighting the release of the US ISM Manufacturing PMI – in order to grab some short-term trading opportunities later during the early North-American session.

Technical levels to watch