- GBP/USD met with some fresh supply on Monday amid a pickup in the USD demand.
- Reports of a split on Johnson’s coronavirus strategy further weighed on the sterling.
- The third round of Brexit negotiations eyed for the next leg of a directional move.
The intraday selling around the British pound picked up paced in the last hour and dragged the GBP/USD pair to fresh session lows, around mid-1.2300s.
The pair extended the previous session’s intraday pullback from the 1.2465 region and witnessed some follow-through selling on the first day of a new trading week amid a modest pickup in the US dollar demand.
As investors looked past Friday’s disastrous US NFP report, a goodish pickup in the US Treasury bond yields revived the greenback demand and turned out to be a key factor that exerted some pressure on the cable.
Meanwhile, the latest leg of a sudden drop during the early European session followed reports that UK prime minister Boris Johnson is facing Cabinet splits over his move to quarantine all travellers coming to the UK for 14 days.
This comes on the back of persistent Brexit uncertainties, which took its toll on the British pound. The pair has now erased Friday’s positive move as the focus now shifts to a fresh round of Brexit negotiations starting this Monday.
In the absence of any major market-moving economic releases, either from the UK or the US, the incoming Brexit-related headlines might influence the sentiment surrounding the sterling and provide some trading impetus.
Technical levels to watch
A subsequent weakness below the 1.2340-35 region now seems to accelerate the slide further towards the 1.2300 mark before the pair eventually drops to last week’s swing lows, around the 1.2265 region.
On the flip side, the 1.2400 round-figure mark might continue to act as immediate resistance and is followed by Friday’s swing high, around the 1.2465 region, which if cleared might lift the pair towards the key 1.2500 psychological mark.