GBP/USD on the defensive with UK PMI in the barrel

The GBP/USD is trading down into 1.3170 ahead of the London market session, and Brexit concerns are again coming front and center of traders' concerns.

Brexit concerns are rearing their heads again, after weekend reports that UK PM Theresa May has warned parliament Brexiteers that leeway on negotiations with EU leaders in Brussels is not developing, and that hard-line separatists may soon have to choose between a hard Brexit scenario, an economically punishing outcome, or sacrifice some UK sovereignty in favor of maintaining access to the EU fiscal union.

With Brexit weighing on the Sterling, traders are looking ahead to Monday's upcoming Markit Manufacturing PMI, which is expected to decline from 54.4 to 53.5. The UK PMI drops at 08:30 GMT, and a miss for the figure could see the GBP swinging back into recent lows.

GBP/USD levels to watch

As noted by FXStreet's own Haresh Menghani on the Sterling's near-term technical outlook: "from a technical perspective, the pair seems to have formed a descending trend-channel on short-term charts but has struggled to sustain above the 1.3200 round figure mark. A follow-through buying beyond the mentioned handle has the potential to lift the pair towards reclaiming the 1.3300 mark en-route the descending channel resistance, currently near the 1.3350-60 region.

On the flip side, any meaningful retracement now seems to find immediate support near the 1.3100 handle, below which the fall could further get extended back towards testing the trend-channel support, currently near the 1.3035 region, or fresh YTD lows. A follow-through weakness below the mentioned supports would mark a fresh bearish breakdown and pave the way for an extension of the pair's bearish trajectory."