GBP/USD weakens farther below 1.30 mark, over 2-week lows on negative Brexit headlines

Haresh Menghani FXStreet

• Negative Brexit headlines continue to prompts some fresh selling around the British Pound.
• DUP said to is said to support a proposal to make the EU's Northern Irish backstop illegal.
• Technical selling below the 1.3020-15 region further aggravates the selling pressure.

The GBP/USD pair kept losing ground through the mid-European session and finally broke through the key 1.30 psychological mark in the last hour.

After Friday's goodish bounce to the 1.3100 handle, the pair came under some renewed selling pressure at the start of a new trading week and the downfall was once again influenced by the incoming negative Brexit headlines.

The latest leg of sudden fall over the past hour or so could be attributed to news that the Northern Ireland’s Democratic Unionist Party (DUP) will back an amendment being tabled by the Conservative Party hardliners on Wednesday.

With 40 Tory MPs already poised to support the amendment, DUp's vote will effectively make the EU’s Northern Ireland backstop illegal and eventually prompted some aggressive selling around the British Pound.

Meanwhile, possibilities of some short-term trading stops being triggered below the 1.3020-15 region seem to have further aggravated the selling pressure and could also be one of the factors behind the pair's slide to its lowest level since Oct. 4.

Hence, a follow-through weakness, led by some fresh technical selling and amid absent relevant market moving economic releases, now looks a distinct possibility.

Technical outlook

Mario Blascak, FXStreet's own European Chief Analyst explains: “Technical oscillators including Momentum and the Relative Strength Index extended their turn lower in the neutral territory on a 1-hour chart, while Slow Stochastics that made a bullish swing higher in the oversold territory. As the GBP/USD broke the range of a 50-day moving average at 1.3011 and a 100-day moving average at 1.3088 on a daily chart, next target is 1.2970 representing October 4 low.”

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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