GBP/USD: Bears taking charge on Brexit pessimism, eyes on February low at 1.2772

• GBP/USD is currently trading at 1.2861, between a range of 1.2826 and 1.2923.
• GBP/USD is underperforming due to Brexit concerns while the Dollar is holding in positive territory.

While the Dollar holds in positive territory, in the 97.50s, (DXY), GBP/USD has flopped to a low of 1.2826 and the lowest levels since the 15th of February earlier this year. This is an extension of yesterday's -0.41% versus the Dollar as the situation around Brexit continued to deteriorate.

Since the government confirmed yesterday that it plans to bring a Brexit bill back to Parliament in early June, the markets have traded the risks associated to this situation whereby Labour is not going to be on board with respect to hardlines not willing to shift their stance on the idea of a customs union and with the European Parliament elections unlikely to do May any favours with respect to popularity of the Conservative party.

In the latest news, a) Labour has said it cannot support the Brexit legislation without an agreement, b) the UK's Brexit secretary has highlighted how challenging cross-Brexit talks have been that have not come to any conclusions and c) UK's trade secretary, Jeremy Hunt, has warned that continuing down current path takes us to potential revocation of Article 50 or leaving without a deal and d) Comments from DUP lawmaker, Nigel Dodds, were turning the screw when saying that 'there must be real change to protect the economic and constitutional integrity of the UK and deliver Brexit'.

All in all, the market is positioning out of the pound expecting that UK lawmakers will reject Theresa May's Brexit deal when it is brought back for another parliamentary vote in the first week of June. Also, noting recent polls, one from yesterday, (the Kantar Public) has shown that Labour is 9 points ahead of the Tories and the markets are speculating that this will be Mrs May last roll of the leadership dice.

GBP/USD levels

GBP/USD’s dropped below the April low at 1.2865 and eyes are now for the February low at 1.2772. 

"Immediate downside pressure will be maintained while no rise above the May 10 high at 1.3048 is seen. Only if this level were to be exceeded, would we look for the 1.3185/97 April and current May highs as well as the 61.8% Fibonacci retracement to be retested. The cross will need to regain the 1.3217 January 25 high to introduce scope to the 1.3351/82 resistance area, made up of the February and March highs, where we expect it to struggle,"

analysts at Commerzbank argued. 

With weekly stochastics leaning bearish, on the downside, the 1.2660s would be targetted next on a break of the February lows, where the price would then meet the 78.6% Fibo confluence of the 2019 range year to date.