GBP/USD: sold off below 1.2000 on hard Brexit weekend news

GBP/USD has opened in early Asia under much scrutiny and has sold off on the back of hard Brexit fears post the weekend news.

Over the weekend, the press got stuck into the narrative that Brexit will be a hard exit just days before PM May who will make a speech and reveal some of the plans for leaving the EU. However, the Telegraph reported that May will be telling the UK to once and for all to drop the "Leaver" and "Remainer" titles and that Britain now needs to unite and get prepared for leaving the customs union in order to secure free trade deals across the world and to regain full control of its borders even if that means ending single market membership. The UK High Court is also scheduled to unveil its decision on whether the Parliament has to vote, or not, on the date of the beginning of Brexit.

Sterling is now into the flash crash territory below the 1.20 handle again, something of which could ignite a longer dollar position again across the board as investor's search for safety and yield just days before Trump's inauguration.

GBP/USD levels

Analysts at Commerzbank explained that the failure at 1.2085 would mean a continuation of the descent and should trigger losses to 1.1775 and then 1.1481 the recent spike low. "Intraday rallies are indicated towards 1.2200, where they should start to struggle. Long term trend (1-3 months): Made an interim low at 1.1938 below which lies the 1.1855 May 1985 low."