• Resurgent USD demand prompts some fresh selling on Friday.
• Brexit uncertainties continue to dent sentiment around the GBP.
• Traders now eye US monthly retail sales data for some impetus.
The GBP/USD pair extended its sharp intraday slide and is currently placed at the lower end of its daily trading range, just a few pips above mid-1.2500s.
After yesterday's failure ahead of the 1.2700 handle, the pair met with some aggressive supply and was being weighed down by a strong pickup in the US Dollar demand. In fact, the index that measures greenback strength jumped to 18-month tops, around mid-97.00s, and was seen as one of the key factors exerting fresh downward pressure.
Moreover, the latest optimism over the UK PM May's victory in the leadership challenge on Wednesday might have already faded and concerns over May's ability to get her Brexit deal through the parliament now seemed to dent sentiment surrounding the British Pound.
As Mario Blascak, FXStreet's own European Chief Analyst explains, “the uncertainty over the future of the Brexit deal is still hanging in the air as the UK parliament schedule shows no Brexit deal vote before Christmas. This strategy is putting an increased pressure on lawmakers in the UK parliament to approve the Brexit deal negotiated by Theresa May in a last minute vote or risk a no-deal Brexit scenario.”
Meanwhile, possibilities of some short-term trading stops being triggered on a sustained breakthrough the 1.2610-1.2600 horizontal support might have further collaborated towards aggravating the selling pressure and accelerate the downfall.
It would now be interesting to see if the pair is able to attract any buying interest at lower levels or the ongoing slide marks the end of recent corrective bounce and the resumption of the prior/well-established bearish trend.
Traders now look forward to the US economic docket, highlighting the release of monthly retail sales data, in order to grab some short-term opportunities on the last trading day of the week.
Technical outlook
“Technically, the GBP/USD is still capped within a downward sloping trend with technical oscillators like Momentum and the Relative Strength Index both zig-zaging lower and Slow Stochastics about to maker a bullish crossover just above the oversold territory. The GBP/USD is still trapped in a downward sloping trend on a 1-hour chart with 1.2550 and 1.2500 being the next target” Blascak adds further.
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