GBP/USD quickly reverses early gains after the latest Brexit headlines


   •  PM office dismisses a report that the UK is ready to stay in the customs union.
   •  Modest USD rebound/surging US bond yields add to the downward pressure. 

The GBP/USD pair surrendered majority of its early gains and quickly retreated back to the 1.3500 neighborhood.

The latest leg of a sudden drop from an intraday high level of 1.3570 could be attributed to the latest Brexit headlines, wherein the UK PM office dismissed the report, which said that Britain is ready to stay in the customs union beyond 2021. 

This coupled with a modest pickup in the US Dollar demand, supported by the ongoing upsurge in the US Treasury bond yields, further collaborated to the pair’s sharp fall over the past couple of hours.

Looking at the broader picture, the pair remains confined within a broader trading range held over the past two weeks and lacks any firm near-term directional bias. Hence, it would be prudent to wait for a decisive break through the trading range before positioning for the pair’s next leg of directional move.

With an empty UK economic docket, any fresh Brexit headlines would drive sentiment surrounding the British Pound ahead of the second-tier US economic releases, due later during the early NA session.

Technical levels to watch

Any subsequent weakness back below the 1.3500 handle might continue to find strong support near mid-1.3400s, which if broken might now open room for a resumption of the pair’s prior depreciating slide. 

On the upside, the 200-DMA area, near the 1.3560-70 region, might continue to act as an immediate hurdle and is followed by strong resistance near the 1.3600-1.3610 zone.

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