Search ForexCrunch
  • Renewed Brexit-pessimism continued weighing on the British Pound on Monday.
  • Recovering US bond yields underpinned the USD demand and added to selling bias.

The GBP/USD pair dropped to a fresh session low in the last hour, albeit showed some resilience below the 1.2300 round-figure mark.
Following a modest bearish gap opening at the start of a new trading week, the pair did attempt an intraday bounce but failed to make it through the 1.2335 region – an important pivotal point marked by 200-period EMA on the 4-hourly chart – amid renewed Brexit pessimism.

Brexit uncertainties continue to weigh

Against the backdrop of Friday’s report that the European parliament president has rejected the UK PM Boris Johnson’s new Brexit proposal, the fact that the UK PM Boris Johnson remains firm to leave the European Union on October 31 dented sentiment surrounding the British Pound.
It is worth mentioning that the bloc’s officials see Johnson’s plan as insufficient and the French President Emmanuel Macron has now given Britain until Friday to bring new proposals if an agreement is to be reached by the EU Summit on October 17.
Meanwhile, The Telegraph reported that Senior UK government figures are considering a series of proposals to “sabotage” the EU’s structures if Brussels refuses to agree on a new deal or leave without a deal. The report further added that Johnson would veto the EU’s seven-year budget and send a Eurosceptic commissioner to Brussels to “disrupt” the bloc’s workings if he were forced into a Brexit delay.
This coupled with a modest pickup in the US Dollar demand further collaborated to the pair’s weaker tone. As investors looked past Friday’s mixed US employment details, a goodish rebound in the US Treasury bond yields seemed to be the only factors underpinning the Greenback.
The downside, however, remained cushioned, at least for the time being, as investors seemed reluctant to place any aggressive bets, rather preferred to wait for fresh Brexit developments before positioning for some meaningful trading opportunities amid absent relevant market moving economic releases.

Technical levels to watch