“¢ A follow-through uptick continues to exert some downward pressure.
“¢ Brexit stalemate further dents sentiment surrounding the British Pound.
“¢ Technical selling might turn the pair vulnerable to extend the downfall.
The GBP/USD pair remained depressed through the early European session on Wednesday and dropped to fresh two-month lows, around the 1.2915 region in the last hour.
The pair added to the overnight bearish slide below the very important 200-day SMA and traded with a mild negative bias for the third consecutive session amid a follow-through US Dollar uptick, back closer to 22-month tops.
The greenback was being supported by Tuesday’s stronger US housing market data, which added to last week’s upbeat retail sales figures and eased concerns of an economic slowdown in the world’s largest economy.
Adding to this, reports about fresh attempts to oust the UK PM Theresa May, coupled with the lack of progress in the cross-party talks to break the Brexit deadlock exerted some additional pressure on the British Pound.
As Yohay Elam, FXStreet’s own Analyst explains, “talks between Theresa May’s Conservatives and Jeremy Corbyn’s Labour are not going anywhere fast. Labour blames the Tories for refusing to compromise and the ruling party blames the opposition for dragging its feet.”
Market participants now await fresh Brexit-related update, which along with the USD price dynamics might produce some meaningful trading opportunities amid absent relevant market moving economic releases either from the UK or the US.
From a technical perspective, the pair already seems to have confirmed a near-term bearish breakdown and hence, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility.
Technical levels to watch
Yohay Elam offers important technical levels and writes: “Support awaits at 1.2895 which separated ranges in mid-February. Further down, 1.2830 was a support line in early February and 1.2775 was the low point that month.”
“Looking up, resistance awaits at 1.2960 which was the low point in March, followed by 1.2985 that was a swing low earlier in April. The recent recovery attempt hit 1.3020 which is the next level to watch. 1.3060 is next,” he added further.
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