GBP/USD: Political headlines leave a Brexit-sized hole

The GBP/USD is trading just shy of the 1.2800 technical level heading into Friday's London market session after a tense Thursday that left the Cable rattled as Brexit headlines continue to whip the kingdom, and it's related markets, into a frenzy despite the supposed clinching of a last-second Brexit deal with the EU heading into the week's end.

UK Prime Minister Theresa May recently had the pleasure of announcing a still-unpublished tentative deal with the EU that will see the UK maintain access to the European continent's customs and fiscal unions, but the number of concessions within the half-plan are likely far outside of anything the UK's Tory government would be willing to agree to, and the British parliament was rocked by the sudden departure of Dominic Raab, the UK's newest Brexit minister, who resigned yesterday over the contents of May's latest Brexit deal, and the DUP-Tory agreement is facing strain as rumour headlines are swirling into Friday that the Northern Ireland DUP, along with several key hard-line Brexiteers within the UK's Tory party, are openly calling for a no-confidence vote in PM May, and Brexit angst can be expected to continue rising in the coming weeks.

The economic calendar for the UK side remains painfully empty for Friday, leaving the GBP exposed to the full force of Brexit headlines for the day's session, with only Industrial Production for the US trading window at 14:15 GMT, but the mid-tier indicator is unlikely to drive much momentum as broader markets remain trapped in vicious cycles of risk flows into and out of both the Greenback and the Pound Sterling.

GBP/USD Levels to watch

The Cable found itself at the wrong end of a Brexit-fueled freefall on Thursday, declining over 300 pips peak-to-trough from the day's high, and as noted by FXStreet Chief Analyst Valeria Bednarik, "the GBP/USD pair was again subject of high volatility throughout the day. It traded as low as 1.2729, its lowest for this November, recovering just modestly from such low ahead of the close, still well below the 1.2800 level. Technical readings are now aligned with the fundamental background, something that implicates a steeper decline ahead. The 4 hours chart shows that the battle around the 200 EMA was lost by bulls, with the pair now roughly 200 pips below it, also below a bearish 20 SMA. Technical indicators in the mentioned chart maintain their strong bearish slopes near oversold readings. A break through the mentioned daily low, exposes 1.2690, October monthly low, while below this one, 1.2661, the year low posted last August comes next."

Support levels: 1.2730 1.2690 1.2660

Resistance levels: 1.2810 1.2855 1.2900