- Resurgent USD demand prompted some long-unwinding trade on Monday.
- Not so encouraging Brexit headlines further weighed on the British Pound.
- Investors now eye UK Supreme Court hearings for some short-term impetus.
The GBP/USD pair failed to capitalize on Friday's strong up-move to fresh multi-week tops - levels just above the key 1.2500 psychological mark - and witnessed a modest intraday pullback at the start of a new trading week. The US Dollar regained some positive traction in the wake of a generally weaker sentiment following an attack on oil fields in Saudi Arabia. This coupled with some discouraging Brexit headlines undermined the British Pound and further collaborated to the pair's slide to the 1.2400 round-figure mark.
Brexit headlines continue to influence
Sterling weakened after Luxembourg Prime Minister Xavier Bettel reiterated that the European Union won't give the UK another Brexit extension "just for the sake of another extension" and further added that the Withdrawal Agreement signed by former PM May is so far the only possible solution. Meanwhile, a meeting between the UK PM Boris Johnson and European Commission President Jean-Claude Juncker ended without any noticeable progress and did little to influence the price action.
The pair finally settled in the red but showed some resilience at lower levels and held steady above the 1.2400 handle through the Asian session on Tuesday. In absence of any major market-moving economic releases - either from the UK or the US - the incoming Brexit-related news/developments might continue to drive market sentiment surrounding the British Pound and produce some short-term trading opportunities. Apart from this, investors on Tuesday might also take cues from the UK Supreme court hearing on a case against the PM Johnson, stating that he acted unlawfully while proroguing the parliament.
Short-term technical outlook
From a technical perspective, the pair on Monday faced rejection near 100-day SMA, which should now act as a key pivotal point for bullish traders. A sustained move beyond the mentioned barrier - around the 1.2500 handle - is likely to accelerate the up-move towards the 1.2565 resistance zone - representing 50% Fibo. level of the 1.3178-1.1958. The momentum could further get extended towards the 1.2600 round-figure mark en-route 200-day EMA resistance near the 1.2665-70 region.
On the flip side, a subsequent slide below the 1.2400 handle might prompt some long-unwinding trade and turn the pair vulnerable to fall back towards testing sub-1.2300 level, with some intermediate support near the 1.2335-30 horizontal zone.
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