Search ForexCrunch

   “¢   Investors looked past Friday’s positive Brexit headlines.  
   “¢   A goodish pickup in the USD demand prompts fresh selling.
   “¢   Risk-off mood further aggravates the downward momentum.

The GBP/USD pair extended its retracement slide from over one-week tops and dropped to fresh session lows, around mid-1.3000s in the last hour.

The pair came under some renewed selling pressure at the start of a new trading week and eroded over 50% of Friday’s goodish up-move, led by a Bloomberg report that the EU would offer the UK a “super-charged” free-trade deal.  

With investors looking past the latest Brexit optimism, renewed US Dollar buying interest, supported by a positive assessment of the US monthly jobs report, was seen as one of the key factors exerting some fresh downward pressure on the major.

The US economy added 134K new jobs in September, much lower than 185K anticipated, but was largely negated by a sharp upward revision of previous month’s reading to 270K and a fall in the unemployment rate to the lowest level since 1969.

Meanwhile, the prevalent risk-off mood, triggered by resurfacing US-China trade tensions and Italian budgetary worries, further benefitted the greenback’s safe-haven status against its British counterpart and further collaborated to the pair’s sharp intraday fall.  

It would now be interesting to see if the pair is able to catch any fresh bids at lower levels or the current slide, from levels just above 100-day SMA, marks the end of a goodish bounce, witnessed over the last two trading session.  

There isn’t any important market-moving economic data due for release from the UK, while the US markets will remain closed in observance of Columbus Day and hence, the pair remains at the mercy of any fresh Brexit-related news/developments.  

Technical levels to watch

A follow-through weakness below the 1.3035 immediate horizontal support is likely to accelerate the slide back towards the key 1.30 psychological mark before the pair eventually drops to retest 1.2935-25 support area.

On the flip side, the 1.3100 handle now becomes immediate strong resistance, above which the pair is likely to extend the positive momentum further towards 1.3175-80 supply zone en-route the 1.3200 handle.