The GBP/USD pair opened with a bearish gap on the back of weekend political headlines that 40 Conservative MPs are readying to challenge Theresa May's leadership by signing a letter of no confidence. The news came at a time when the UK is facing a crucial deadline on the final Brexit settlement bill and eventually weighed heavily on the British Pound.
Meanwhile, renewed concerns over the progress of US tax-cut legislation, coupled with the recent upbeat UK economic data, helped limit deeper losses. There aren't any major market-moving economic releases due for release on Monday but investors are likely to refrain from placing aggressive bets ahead of this week's key macro data from the UK and the US. In the meantime, the UK political headlines and fresh news/developments surrounding the long-awaited US tax bill will drive the pair at the start of a new trading week.
Technically, the pair failed just ahead of the 50-day SMA and retreated sharply from a short-term ascending trend-channel hurdle, albeit has managed to defend the channel support. A decisive break through the trend-channel support, currently near the 1.3100 handle, is likely to accelerate the fall towards Nov. daily closing lows support near the 1.3060 region. The downside could further get extended towards a short-term descending trend-line support near the key 1.30 psychological mark.
On the flip side, any recovery attempts might now confront fresh supply near the 1.3145-50 region, above which a bout of short-covering could lift the pair back above the 1.3200 handle towards retesting the 1.3220-25 heavy supply zone. The mentioned barrier also coincides with the short-term ascending trend-channel resistance and hence, might continue to keep a lid on any further up-move for the major.
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