GBP/USD struggling to recover back above 1.3100 handle

Haresh Menghani FXStreet

• Sliding US bond yields help limit deeper losses.
• Renewed UK political uncertainty might cap immediate up-move.

The GBP/USD pair has managed to rebound around 30-pips from multi-day lows but was still seen struggling to move back above the 1.3100 handle.

The British Pound fell sharply at the start of a new trading week amid speculation that the UK PM Theresa May could be pushed aside by members of her governing Conservative Party in a no-confidence vote.

The Sunday Times newspaper reported that as many as 40 MPs, just 8 shy of the total needed to launch a formal leadership challenge, are prepared to sign a letter backing the removal of May over her perceived weakness as Prime Minister and the lack of progress in Brexit talks with European Union officials in Brussels.

The latest political development came at the time when the UK has been asked to provide clarity on the final Brexit settlement bill within 2-weeks and prompted some fresh selling around the British Pound.

• UK: Buckle up... it's going to be a bumpy Brexit ride - ING

The selling pressure, however, seems to have abated, at least for the time being, with a sharp slide in the US Treasury bond yields failing to assist the US Dollar to build on early up-move and providing some respite for the major.

With a data-empty US economic docket, the incoming UK political headline and Brexit news would remain key determinants of the pair's movement through Monday's trading session.

Technical outlook

Bears would be eyeing for a breakthrough Nov. daily closing lows support near the 1.3060 region, below which the pair is likely to head towards testing the key 1.30 psychological mark.

On the upside, any recovery move back above the 1.3100 handle now seems to confront fresh supply near the 1.3130-35 region, above which the pair is likely to head towards the 1.3180-90 region and fill the weekly bearish gap.

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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