Bearish pressure surrounding the British Pound remained unabated amid renewed concerns over a no-deal Brexit, with the GBP/USD pair tumbling to three-month lows on Thursday. The UK government kept saying that cross-party talks are continuing with the opposition Labour party but the fact that there hasn't been any concrete progress in the negotiations and both parties have failed to produce any solution to the current Brexit impasse continued taking its toll on the Sterling.
The already weaker sentiment deteriorated further after Labour Party's Brexit spokesman Keir Starmer told reporters that his party will vote against the UK PM Theresa May’s Withdrawal Agreement Bill unless there is a deal with the government. It is worth mentioning that after failing to get parliament's approval three times, the government has pledged to bring back the Brexit deal before the parliament for yet another vote in early June.
On the other hand, the US Dollar picked up the pace in wake of a goodish intraday turnaround in the US Treasury bond yields, which exerted some additional downward pressure on the major. Thursday's upbeat US economic data - Philly Fed Manufacturing Index, the usual initial weekly jobless claims and housing market data remained supportive of the USD bid tone and did little to provide any immediate respite for the GBP bulls.
The pair held on the defensive through the Asian session on Friday and in absence of any major market moving economic releases, the incoming Brexit-related headlines might continue to act as an exclusive driver of the sentiment surrounding the British Pound. Later during the early North-American session, the only scheduled release of May Prelim UoM Consumer Sentiment Index from the US is more likely to be overshadowed by the Brexit-related UK political chaos.
Looking at the technical picture, the pair broke through a descending trend-line support extending from March-April swing lows and is currently placed near its next major support - marked by 61.8% Fibonacci retracement level of the 1.2396-1.3381 up-move. Given that technical indicators are pointing to near-term oversold conditions, bearish traders are likely to take some breather near the mentioned support, which if broken might set the stage for a further decline towards the 1.2700 round figure mark. On the flip side, a sustained recovery back above the 1.2800 handle might prompt some short-covering move but any subsequent up-move now seems more likely to remain capped near the 50% Fibonacci retracement level support break-point, around the 1.2875-80 region.
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