- GBP/USD came under some renewed selling pressure on Monday amid fears of a no-deal Brexit.
- A goodish pickup in the USD demand further contributed to the pair’s decline to two-week lows.
The GBP/USD pair continued losing ground through the mid-European session and dropped to near two-week lows, around mid-1.3100s in the last hour.
The British pound took a hit on the first day of a new trading week amid increasing risk of a messy end to the Brexit transition period on December 31. British Prime Minister Boris Johnson on Sunday set October 15 as the deadline for a post-Brexit trade agreement with the European Union.
The UK’s chief negotiator, David Frost also did little to raise expectations about a breakthrough and said that Britain was not scared of a no-deal exit at the end of the year. The not so comforting Brexit-related headlines come ahead of the eighth round of negotiations starting this week, which, in turn, was seen as one of the key factors undermining the sterling.
Apart from this, a strong pickup in the US dollar demand further contributed to the GBP/USD pair’s intraday slide of over 125 pips, to the lowest level to August 26. The USD bulls seemed unaffected and largely shrugged off concerns about the sustainability of the US economic recovery.
Nevertheless, the GBP/USD pair already seems to have confirmed a near-term bearish breakdown and seems vulnerable to slide further. Given that the US markets are closed in observance of Labor Day, the incoming Brexit-related headlines might continue to play a key role in influencing the pair’s momentum and assist traders to grab some short-term opportunities.
Technical levels to watch
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