GBP/USD tumbles to lows, back below 1.31 handle

   •  UK political crisis taking a toll on sterling.
   •  Focus remains on the US tax bill. 

Having posted a session high level of 1.3153, the GBP/USD pair took a sharp U-turn and tumbled to fresh session lows in the last hour, albeit quickly recovered few pips thereafter.

Against the backdrop of growing frustration over the lack of progress on Brexit talks, the UK political crisis, wherein the PM Theresa May lost another cabinet minister on Wednesday, was seen taking a toll on the British Pound. 

The latest UK political developments helped offset uncertainty surrounding the US tax reforms plan, and a modest US Dollar weakness, and acting an exclusive driver of the pair's weaker tone for the third consecutive session.

Meanwhile, the pair's sharp fall, especially over the past couple of hours, could also be attributed to some to some cross-driven weakness, led by a follow-through EUR/GBP demand and heavy GBP/JPY supply.

   •  GBP/USD under pressure, eyes on 1.3058/22 – Commerzbank

It would now be interesting to see if the pair can recover back above the 1.3100 handle or an additional long-unwinding trade keeps exerting downward pressure amid data light economic docket on Thursday. Later in the day, the US tax bill text is slated to be revealed and would be a key event risk to watch for. 

Technical levels to watch

Any subsequent weakness seems more likely to get extended towards post-BoE swing lows support near the 1.3040 region en-route the key 1.30 psychological mark. 

On the upside, any recovery attempts back above the 1.3100 handle might continue to confront fresh supply near mid-1.3100s, which if cleared could assist the pair back towards reclaiming the 1.3200 handle.