• UK Brexit minister Dominic Raab’s resignation prompts some aggressive selling.
• UK PM May likely to face a no-confidence vote and adds to the political uncertainty.
• Dismal UK monthly retail sales did little to ease the prevalent bearish pressure.
The GBP/USD pair tumbled to two-week lows, retreating over 225-pips from an intraday high level of 1.3030 in reaction to the latest UK political developments.
The initial leg of sharp retracement from 100-day SMA was triggered by the UK Brexit minister Dominic Raab's resignation in protest of the UK PM Theresa May’s Brexit deal. Adding to this, the UK Conservative Lawmaker believed that committee has the 48 letters calling for a no-confidence vote against the UK PM May.
Despite securing Cabinet support on the Brexit draft agreement, the latest political uncertainty prompted some aggressive selling around the British Pound and dragged the pair decisively below the 1.2800 handle in the last hour.
Mario Blascak, FXStreet's own European Chief Analyst writes: “After striking the Brexit deal the European Summit is going to be assembled next Sunday, November 25. The reason for the European summit assembled for Sunday is either because it is going to be the ceremonial end to lengthy negotiations, or because it is going to be a disaster and politicians opted for off the market hours.”
Meanwhile, today's disappointing UK monthly retail sales data, coming in to show a contraction of 0.5% m/m, did little to ease the prevalent strong bearish sentiment surrounding the British Pound and stall the pair's ongoing slump.
It would now be interesting to see if the pair is able to find any buying interest at lower levels or the current downfall marks the start of a fresh leg of bearish trajectory amid expectations of further monetary policy divergence between the Fed and the BoE.
Technical outlook
“With Brexit deal about to be approved, the potential for the upside mounts as the Momentum and the Relative Strength Index both remain in the neutral while Slow Stochastics is set to make a bullish crossover on a daily chart. Moreover, the golden cross of a 50-day moving average crossing over a 100-day moving average to the upside was formed on a daily chart indicating final trend reversal targeting 1.3060 before moving to 1.3380 and 1.3460 important Fibonacci level,” Mario further added.
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