GBP/USD continues losing ground, hits fresh 4-month lows around mid-1.2700s

Haresh Menghani FXStreet

• Brexit-related chaos continues to dent sentiment surrounding the British Pound.
• Cross-party talks end without a deal and fueled concerns about a no-deal Brexit.
• A modest pickup in the USD demand further collaborates to the ongoing slide.

The GBP/USD pair remained heavily offered through the mid-European session on Friday and is currently placed at fresh four-month lows, around mid-1.2700s.

The pair extended its recent downward trajectory and the bearish pressure aggravated on news that cross-party talks - aimed at breaking the Brexit impasse have ended without an agreement. Differences over an option of a permanent customs union and a second referendum were reported as the main issues as to why talks between the government and Labour broke down.

Meanwhile, the Labour party leader, Jeremy Corbyn confirmed that his party will still oppose the UK PM Theresa May's Withdrawal Agreement Bill when it is brought back before the parliament for yet another vote in early June. This clearly indicated that May's Brexit deal stands no chance to get parliament's approval for the fourth time and further fueled concerns about a no-deal Brexit.

Adding to this, some renewed US Dollar buying interest, supported by Thursday robust US economic data and safe-haven flows - amid a further escalation in the US-China trade tensions, exerted some additional downward pressure and contributed to the pair's heavily offered tone the fifth consecutive session.

Technical levels to watch

As Yohay Elam, FXStreet's own Analyst explains: “The 1.2775 level mentioned earlier is critical. A drop below it will open the door to 1.2670 that was a swing low in January. It is followed by 1.2620 which dates back to December last year.”

“Resistance awaits at 1.2830 which was a temporary support line on the way down. It is followed by 1.2900 that provided support as well, and 1.2925 that capped a recovery attempt,” he added further.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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