GBP/USD reverses course, hits lows near 1.3050 on Brexit anxiety

• Bears taking back charge amid calls for a no-confidence vote against UK PM May.
• Technical set up points to further bearish bias, as the focus remains on the Brexit issue.

The bears fought back control in the European session, knocking-off the GBP/USD pair to fresh session lows below the 0.7050 level, as markets turn anxious amidst calls for a no-confidence motion to be tabled against the UK PM Theresa May.

The probability of May getting ousted from her position as the UK PM has increased after she announced on Friday that the UK is ready to drop the Irish border demand in order to reach a Brexit deal. 

The Cable remains exposed to further downside risks, especially after the weekend negotiations between the UK Brexit Secretary Raab and the European Union chief Brexit negotiator Michel Barnier ended in disarray.

“In the absence of important macro news from the UK next week, the Brexit negotiations related news and the notion of the US economy moving full steam ahead towards gradual rate hikes is set to drive Sterling lower,” FXStreet´s Editor-in-Chief, Mario Blascak, PhD, noted.

GBP/USD Technical levels

According to Slobodan Drvenica at Windsor Brokers, “bulls attack again strong resistance zone between 1.3087 and 1.3103 (100/20/30SMA/ Fibo 38.2% of 1.3257/1.3011), where Friday’s recovery rally stalled. Sustained break here is needed to signal higher base and further recovery. Momentum remains with bulls on daily chart and slow stochastic reversed and attempting to emerge from oversold territory, supporting the recovery. Extension above 1.3103 could challenge 1.3132 (10SMA) and 1.3163 (Fibo 61.8% of 1.3257/1.3011). Negative scenario sees risk of fall below 1.30 zone and test of higher base at 1.2921, loss of which would confirm reversal. Res: 1.3103; 1.3132; 1.3163; 1.3200. Sup: 1.3047; 1.3012; 1.3000; 1.2944.”