GBP/USD recovers after tumbling to sub-1.3100 level on Brexit headlines

Haresh Menghani FXStreet

• Investors looked past today’s hotter-than-expected UK inflation figures.
• The latest Brexit headlines prompt some aggressive selling in the last hour.
• Focus remains on the informal EU summit on Wednesday and Thursday.

The GBP/USD pair faded the post-UK CPI bullish spike to two-month tops and tumbled over 125-pips in a knee-jerk reaction to the latest Brexit headlines.

The British Pound, on Wednesday, got a fresh lift from hotter-than-expected UK consumer inflation figures, which assisted the pair to finally break through 100-day SMA hurdle.

The up-move quickly ran out of steam near the 1.3215 region, with the news that the UK PM Theresa May will reject Michel Barnier’s “improved” offer to solve the Irish border issue prompting some aggressive selling in the last hour.

In the process, the pair took along some short-term trading stops placed at a short-term ascending trend-line support, near mid-1.3100, which further collaborated towards aggravating the downfall.

The selling pressure now seems to have abated and the pair has managed to quickly rebound around 40-45 pips from sub-1.3100 level to trade around the 1.3135-40 region.

The incoming Brexit headlines might continue to act as a key determinant of the pair's momentum as market participants now look forward to the upcoming informal EU summit in Salzburg on Wednesday and Thursday.

Technical levels to watch

Renewed weakness back below the 1.3100 handle now seems to drag the pair further towards testing the 1.3060-50 support area ahead of the key 1.30 psychological mark. On the upside, the 1.3165 area now becomes immediate resistance, above which the pair is likely to make a fresh attempt to conquer the 1.3200 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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