GBP/USD stumbles out of the gate as EU leaders reject Brexit proposals

The GBP/USD pairing kicks off the new trading week with a bearish twist to Monday, testing near 1.3120 and halting Friday's bullish stance, as European leadership in Brussels have flat-out rejected British Prime Minister Theresa May's latest Brexit proposal, stating that the 'third option' proposal would rob the European Union of "decision-making autonomy", by preventing the EU from retaining the right to withdraw access to European trade markets if the deal were to be accepted.

The EU has rejected the UK's latest proposal on how to govern the city of London's access to European financial markets after Brexit, and PM May and her cohort within the UK parliament are once again back to the drawing board on how to negotiate a smooth Brexit, with hard-line Brexiteers on one side steadily gearing up to begin making moves to outright oust Theresa May, and staunch European leaders in Brussels unwilling to make sacrifices on their part so that the UK can cherry-pick EU laws to follow or abandon.

After last week's dismal showing for economic data from the UK, the Sterling heads into a trading week that is decidedly thin on the macro calendar, and Monday will bring fresh bearish action as Brexit once again returns to headlines, and the only slated event for Monday is a speech from the Bank of England's (BoE) MPC Member Haldane due later in the day at 17:00 GMT.

GBP/USD Levels to watch

Friday's late bullish move looks to have already run out of gas now that Brexit is back to the forefront, and as FXStreet's Valeria Bednarik noted, "the daily chart indicates that bears are still in control of the pair, as the latest recovery stalled below its 20 DMA, while technical indicators have managed to recover some ground, but remain in negative territory. In the 4 hours chart, the pair settled above a sharply bearish 20 SMA, still some 150 pips below the 200 EMA, while technical indicators stand well above their midlines, but lost their upward strength. The pair could continue advancing on a break above 1.3155, the immediate resistance, although the first line of sellers should appear around the 1.3200 figure. Renewed selling pressure below the 1.3100 level, on the other hand, will likely favor additional declines for this Monday, toward the key 1.3000 psychological threshold."

Support levels: 1.3100 1.3065 1.3030

Resistance levels: 1.3155  1.3195 1.3240