The GBP/USD pair trimmed a part of the mid-European session slump, albeit remained capped below the 1.3100 handle amid a flurry of incoming Brexit headlines.
The pair lost nearly 200-pips and tumbled to the key 1.30 psychological mark in what could be termed as a knee-jerk reaction to the UK Attorney General Geoffrey Cox’s thumbs down on the PM May’s new Brexit plan.
The British Pound plunged across the board after Cox said that the interpretive document offered by the EU would grant no legally guaranteed right to exit the Irish Backstop in the event of a deal deadlock.
Despite the negative legal advice, the bearish pressure now seems to have abated and the pair quickly recovered over 90-pips following some positive mood emerging out of the PM’s cabinet meeting
With Brexit turning out to be an exclusive driver of the sentiment surrounding the British Pound, the pair seemed rather unaffected by softer US consumer inflation figures and a subdued US Dollar price action.
Moving ahead, today’s key focus will remain on the UK parliament vote, which if rejected will be followed by a no-deal motion tomorrow and the last vote on the probable extension of Article 50 on Thursday.
Technical outlook
Yohay Elam, FXStreet’s own Analyst provides important technical levels to watch out for: “The Technical Confluences Indicator shows that cable is now hovering above critical support at around 1.3000. If pound/dollar loses this line, the next support line awaits at 1.2912 where we see the Pivot Point one-month Support 1 and the SMA 100-one-day.”
“Some resistance awaits at 1.3060 which is the meeting point of the Fibonacci 23.6% one-week and the SMA 200-4h. A more considerable cap awaits at 1.3095 which is where the potent Fibonacci 38.2% one-day converges with the Fibonacci 38.2% one-week, the SMA 100-15m, and the BB 4h-Middle,” he added further.
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