GBP/USD Forecast: Turning bearish again, investors eye May's Brexit Plan B

The GBP/USD pair faced rejection near the key 1.30 psychological mark on Friday and erased all of the previous session's gains to over two-month tops. With plenty of Brexit uncertainties still on the table, the disappointing release of UK monthly retail sales data triggered the initial leg of long-unwinding pressure. This coupled with a strong pickup in the US Dollar demand further collaborated towards accelerating the downward momentum through the US trading session. 

Optimism over US-China trade continued fueling risk-on mood and lifted the US Treasury bond yields. In fact, the 10-year bond yield rallied to three-week tops on Friday, which lifted the greenback to near two-week tops and helped post its first positive weekly performance since mid-December. The USD bulls seemed rather unaffected by growing market concerns that the US government shutdown could begin to have a negative economic impact and pushed the pair farther below the 1.2900 handle. 

Meanwhile, expectations for an extension of Article 50, despite repeated denials by the UK government, and the market stance of a diminishing hard Brexit risk failed to lend any support and ease some renewed bearish pressure surrounding the British Pound. The pair held on the back-foot at the start of a new trading week as the focus now shifts to the UK PM Theresa May's Brexit 'plan B', to be announced later today. 

Looking at the technical picture, Friday's sharp retracement reinforced a key hurdle marked by near four-month-old descending trend-line, which had capped attempted moves beyond 100-day SMA on several occasions. Hence, a follow-through selling below the 1.2835-30 region might now turn the pair vulnerable to break below the 1.2800 handle and head back towards challenging the 1.2750-45 intermediate support en-route the 1.2700 round figure mark.

On the flip side, the 1.2920-30 region once again becomes immediate resistance, though the key hurdle remains near the 1.3000 handle. A convincing break through the mentioned barrier now seems to accelerate the up-move further towards the 1.3100 handle before the pair eventually aims to test the next major hurdle near the 1.3140-50 supply zone.