Brexit disappointments drag GBP/USD to 3-week low at the start of key week

• GBP/USD trades near 1.2970 during the early Asian session on Monday.
• The pair tests three-week low as the UK rejected several EU Brexit offers and increased uncertainty ahead of key week concerning parliamentary voting.
• 1.2950 can act as near-term strong support while 1.3000 may restrict immediate upside.

The British Pound (GBP) drops to 1.2970 versus the US Dollar (USD) at the start of Asian trading on Monday. In spite of likely Brexit delay, no clear Brexit deal after long negotiations between the UK and the EU leaders ahead of the key week when the British parliament is to vote on various Brexit aspects dragged the GBP/USD pair to a three-week low. Investors will closely observe the UK parliamentary voting beginning 12th March in order to determine near-term trade direction.

GBP/USD slid beneath 1.3000 as the UK rejected several EU Brexit offers before the British parliament votes on new Brexit proposal on this Tuesday. Notable among the EU offers was the UK’s exit without giving any leeway to the Irish backstop.

The CNBC reported that British foreign minister Jeremy Hunt said on Sunday that Brexit could be reversed if lawmakers reject the government's exit deal. Not only another referendum but challenges to the PM Theresa May’s position were also on the rise that added further weakness into the GBP. The Sunday Times also wrote that senior Brexiteers had warned the PM's team that she should offer to go by June. The news report further said some among the hard opposition party members has warned May that she would only get her deal through if she quit, leaving the path open for another PM to lead the next set of negotiations on the future trading relationship.

On Tuesday, March 12, the British members of parliament (MPs) will vote for the PM May’s latest Brexit proposal negotiated with the EU. If the proposal gets rejected, as it is most likely, it would open the door for voting on “no deal exit” on March 13. If MPs reject leaving the EU without any deal, they have to vote on the delay of Brexit deadline/Article 50 from 29 March currently on March 14.

While uncertainty surrounding Brexit is dragging the GBP/USD down, investors might await the UK market open in order to support Bears.

GBP/USD Technical Analysis

The GBP/USD pair dropped beneath 200-day simple moving average (SMA) figure of 1.2990 but is yet to clear an upward sloping support-line connecting January – February lows, near 1.2950. A break of which can fetch the quote 100-day SMA level of 1.2880.

Alternatively, the pair needs to surpass 1.3000 round figure in order to challenge 1.3080 and 1.3110 resistance levels.