GBP/USD plummets to 3-month lows near 1.2850 on latest Brexit headlines

After piercing through the 1.29 mark, the GBP/USD pair extended its slide and touched its lowest level since February 15 at 1.2852 in the last hour. As of writing, the pair was trading a couple of pips above that level, losing 0.4% on a daily basis.

The latest headlines surrounding cross-party Brexit talks in the UK seem to be weighing on the British pound. A spokesman for the opposition Labour party in the last hour told reporters that gaps remained between the Labour Party and the government in Brexit talks. "We have made it clear that we cannot support the Brexit legislation without an agreement," the spokesman reiterated. Although the fact that the Brexit vote is expected to take place in the first week of June shows that there is still time for sides to come to an agreement, markets don't seem to be convinced that a positive outcome is likely in the near-term.

On the other hand, British Prime Minister Theresa May's spokesman said that discussions with lawmakers across the House to seek to build a majority to pass the Brexit legislation were ongoing.

Meanwhile, the U.S. Census Bureau today reported that retail sales in April declined by 0.2% to fall short of the market expectation for an increase of 0.2%. Nevertheless, the US Dollar Index largely ignored this data and was last up 0.1% on the day at 97.65, making it difficult for the pair to stage a recovery.

Later in the session, the Fed's industrial production and capacity utilization from the U.S. will be looked upon for fresh catalysts.

Technical levels to consider

The pair could face the initial support at 1.2800 (psychological level) ahead of 1.2770 (Feb. 14 low) and 1.2710 (Jan. 8 low). On the upside, resistances are located at 1.2920 (daily high), 1.2960 (200-DMA) and 1.3000 (psychological level/50-DMA).