GBP/USD quickly reverses a knee-jerk slide to sub-1.2800 level

   •  Brexit headlines continue to infuse volatility around GBP pairs.
   •  Subdued USD price action does little to influence the momentum.
   •  Investors seemed to wait for fresh political news-flow from the UK.

The GBP/USD pair quickly reversed a knee-jerk slide to sub-1.2800 level and has managed to recover around 50-60 pips from daily lows touched during the mid-European session.

After some early strength to an intraday high level of 1.2884, the pair came under some renewed selling pressure and tumbled by nearly 100 pips in reaction to Reuters’ headlines, which raised uncertainty/divergence over extensions to the Brexit transition.

According to the FT, the EU’s chief Brexit negotiator has proposed extending Britain’s transition out of the bloc until as late as December 2022. Meanwhile, the UK PM Theresa May's spokesman said that the UK does not need an extension to the implementation period, rather the PM is adamant that transition extension must end before next general election in June 2022.

The downtick, however, turned out to be short-lived and the pair quickly recovered back to mid-1.2800s. Investors seemed reluctant to place any aggressive and preferred to wait for any news-flow on the latest UK political developments, wherein Brexiteers were said to be preparing for a no-confidence vote in the PM within two days. 

With the incoming Brexit-related headlines turning out to be an exclusive drive of the sentiment surrounding the British Pound, a subdued US Dollar price action did little to influence the price action on the first day of a new trading week amid absent relevant market moving economic releases.

Technical levels to watch

Any subsequent up-move might continue to confront some fresh supply near the 1.2870-80 region and is closely followed by the 1.2900 handle, above which a fresh bout of short-covering might further lift the pair towards the 1.2935-40 supply zone.

On the flip side, sustained weakness below the 1.2800 handle, leading to a subsequent breakthrough the 1.2775-70 region might turn the pair vulnerable to resume with its prior depreciating slide towards challenging the 1.2700 round figure mark.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD battles with 1.1700 as the market mood turns sour

Poor German data and renewed concerns about a default of the Chinese Evergrande property giant undermined investors’ sentiment, pushing them into the dollar’s safety.


GBP/USD accelerates its slump, trades around 1.3650

GBP/USD is under strong selling pressure, trimming most of its post-BOE gains. Concerns about the global financial health and slow moves towards tapering weigh on markets.


XAU/USD hangs near multi-week lows, around $1,745 ahead of Powell

Gold struggled to capitalize on its attempted intraday recovery move. Hawkish Fed/BoE, rising bond yields acted as a headwind for the metal. Resurgent USD demand exerted additional pressure on the commodity.

Gold News

PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’

PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.” Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law. 

Read more

Evergrande, VIX and yields make for choppy day ahead

Equity markets remain focused on Evergrande as rumours of a possible default on overseas debt swirl. The market appears to be on the hunt for negative news, which leads us to conclude that stocks are going lower in the short term.

Read more