GBP/USD drops to lows near 1.2970, USD buying picks-up pace

Having witnessed a brief consolidative phase around 1.30 handle almost throughout the latter part of the Asian session, the GBP/USD pair ran into fresh offers in the European session, as the European traders reacted negatively to the weekend’s report of the UK PM May threatening to quit Brexit talks if it faces massive bill of a EUR 100 billion.

Forex Today: GBP dumped on Brexit jitters, Fedspeaks, UK May eyed

Moreover, a pick-up in buying interest seen around the US dollar against its major rivals also collaborates to the renewed downside in GBP/USD. The greenback is seen rising in back in demand on the back of a short-covering rally after last week’s US political chaos, and ahead of this week’s Trump budget proposal and Comey’s testimony.

Further, expectations that the FOMC may quell doubts over a June Fed rate hike, boosted the US yields across the curve, and hence, dulled the demand for the pound as an alternative higher-yielding currency.

Moreover, the British currency remains under pressure, as the latest opinion polls on the UK elections show diminishing support for the UK May’s Conservatives party. Meanwhile, increased nervousness ahead of BOE’s inflation report hearings due tomorrow, also keeps cable undermined. Later today, a couple of Fedspeaks and USD dynamics will drive the moves in the major.

GBP/USD Levels to consider            

Slobodan Drvenica at Windsor Brokers Ltd noted: “The rally is facing strong headwinds from descending weekly cloud base, which continues to limit attempts above 1.30(cloud base currently lies at 1.3016). Politics may also weigh on pair's near-term action. The pair is so far holding within 1.2964/1.3022 range and still away from strong supports at 1.2934/19, provided by converging 10 and 20 SMA's. Break here would weaken near-term structure and risk further easing. Key near supports lay at 1.2843/30. Res: 1.3000; 1.3022; 1.3046; 1.3100 Sup: 1.2964; 1.2934; 1.2919; 1.2889.”