GBP/USD: Will the recovery sustain amid UK political woes?

The GBP/USD pair extended its overnight declines in Asia and went on to hit a low just ahead of 1.34 handle before finding fresh bids on broad USD sell-off.

GBP/USD: Resilient to risk-off

 The spot accelerated its pace of decline in early Asia after the pound ran through fresh offers on the news of a plot to assassinate the UK PM Theresa May by the Islamist terrorists hit the wires, although the security services stopped the Islamist suicide bomb plot.

However, over the last hours, GBP/USD is seen making minor-recovery attempts, as the US dollar stalled its US tax reform optimism led upsurge and extended its overnight drop on fears of a possible US government shutdown and dovish remarks from the Chicago Fed President Evans.

In the US last session, Cable came under heavy selling pressure on the back of the renewed jitters surrounding the UK political climate, after the Telegraph reported that Theresa May is facing a Cabinet revolt after Brexiteers led by Boris Johnson and Michael Gove expressed “genuine fear” the PM is trying to force through a soft Brexit. Also, downbeat UK services PMI reading collaborated to the weakness seen around the GBP.

Looking ahead, in absence of macro news from the UK docket, markets will eagerly await the US ADP employment data for fresh momentum on the prices.

GBP/USD Technical Levels

According to Valeria Bednarik, Chief Analyst at FXStreet: “The GBP/USD pair closed lower for a second consecutive day, intraday poised to extend its decline according to technical readings in the 4 hours chart, as the pair is developing below a bearish 20 SMA, which now stands near the 23.6% retracement of the latest bullish run at 1.3470, while technical indicators hold within negative territory, turning marginally lower after nearing their mid-lines, not enough, however, to confirm additional slides ahead that anyway will be directly correlated to Brexit headlines. Support levels: 1.3420 1.3375 1.3340. Resistance levels: 13470 1.3510 1.3550.”