GBP/USD plummets to 7-month lows, closer to mid-1.3100s
| • Brexit uncertainty/fading BoE rate hike prospects prompt heavy GBP selling.
• Resurgent USD demand/technical selling below 1.32 mark aggravate the downfall.
The GBP/USD pair tumbled nearly 100-pips from Asian session high level of 1.3273 and printed fresh YTD lows in the last hour.
The pair fell for the second consecutive session on Tuesday and was further weighed down by the UK Prime Minister Theresa May's loss of a vote on her Brexit legislation in the House of Lords.
An amendment to ensure a “meaningful vote” for Parliament on any deal with the European Union, leading to a lack of sweeping power for Brexit ministers, adds to the uncertainty and was seen weighing heavily on the British Pound.
The downfall took along trading stops placed near the 1.3200 handle, with resurgent US Dollar demand further aggravating the selling pressure and contributed to the ongoing slump to seven-month lows.
It would now be interesting to see if the pair is able to find any buying interest at lower levels or bears maintain their dominant position amid fading prospects for any immediate BoE monetary policy tightening.
The Bank of England is scheduled to announce its latest monetary policy update on Thursday and is widely expected to maintain status quo, albeit the vote count might influence the British Pound in the near-term.
Technical levels to watch
A follow-through selling has the potential to continue dragging the pair further towards 1.3135 horizontal support en-route the 1.3100 handle and the next major support near the 1.3075 region.
On the upside, any meaningful recovery attempt might now confront fresh supply near the 1.3200 handle, above which a bout of short-covering might lift the pair back towards 1.3240-30 support turned resistance.
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