“¢ A goodish pickup in the USD demand prompts some fresh selling at higher levels.
“¢ GBP further weighed down by Brexit uncertainties/calls for PM May to step down.
“¢ Technical selling below 100-hour SMA further accelerates the depreciating move.
The GBP/USD pair kept losing ground through the mid-European session and has now dropped to two-day lows, below mid-1.3000s.
Having posted an intraday high level of 1.3131, the pair met with some fresh supply and added to the previous session’s considerable losses. The pair retreated farther from one-month tops set on Friday and was being weighed down by goodish pickup in the US Dollar demand.
The prevalent risk-off mood, as depicted by weaker trading sentiment around equity markets and sliding US Treasury bond yields, underpinned the greenback’s relative safe-haven status and turned out to be one of the key factors prompting some fresh selling at higher levels.
The pair action further reflects investors’ concern over Theresa May’s survival as Prime Minister and the lack of progress in the cross-party Brexit talks. Growing calls on May to step down post-EU elections on May 23 further dented the already weaker sentiment surrounding the Sterling.
Apart from this, possibilities of some short-term trading stops being triggered on weakness below the overnight swing low, around the 1.3080 region – coinciding with 100-hour SMA, seems to have aggravated the bearish pressure and further collaborated to the pair’s intraday slide of over 80-pips.
In absence of any major market moving economic releases, the pair remains at the mercy of incoming Brexit headlines. This coupled with the USD price dynamics might further contribute towards producing some meaningful trading opportunities through the US session on Tuesday.
Technical levels to watch
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