The British Pound came under some renewed selling pressure on Wednesday in wake of the latest political developments in the UK. The UK political crisis intensified after Priti Patel resigned as International Development Secretary on Wednesday evening on revelations about her series of unauthorized meetings with Israeli officials. Against the backdrop of rising frustration over the lack of progress on Brexit talks, second cabinet reshuffle in a week attracted some fresh selling around the British Pound.
The GBP/USD pair dropped to an intraday low level of 1.3086 but managed to recover back above the 1.3100 handle amid softer tone around the US Dollar, which has now turned defensive on the back of mounting uncertainty over the US tax reforms plan.
On Thursday, the NIESR will release an update on the UK's GDP outlook and the usual weekly initial jobless claims from the US might provide some short-term trading impetus. The key focus, however, would be on the US tax bill announcement, expected to be released at a tentative time on Thursday.
Technically, the pair lacks any firm directional bias and seems more likely to extend its consolidative price action ahead of Friday's UK industrial/manufacturing production data. Currently placed around the 1.3130-35 area, any subsequent up-move might continue to confront some fresh supply near the 1.3175-80 region. Momentum above the mentioned hurdle could get extended beyond the 1.3200 handle but is likely to be capped at the 1.3225-30 heavy supply zone, also nearing 50-day SMA barrier.
On the flip side, weakness back below the 1.3100 handle, leading to a subsequent break below the 1.3085 level (yesterday's low), would turn the pair vulnerable to head back towards testing a short-term descending trend-line support, currently near the 1.3025-20 region.
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