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• The Brexit chaos continues to tarnish the sentiment surrounding the pound sterling.
• Multiparty negotiations end without agreement and fuel concerns about a Brexit without agreement.
• A modest recovery in US dollar demand is also contributing to the ongoing decline.
The GBP / USD remained strongly offered during the mid-European session Friday and is currently at its lowest level over four months, around 1.2700.
The pair has prolonged its recent downward trajectory and bearish pressure has worsened to the news that talks between the parties – aimed at breaking the stalemate over the Brexit ended without agreement. Discrepancies over the option of a permanent customs union and a second referendum were reported as the main reasons why the talks between the government and the Labor Party failed.
At the same time, Labor Party leader Jeremy Corbyn confirmed that his party would still oppose the draft law on the withdrawal agreement of British Prime Minister Theresa May when it will be fired in front of the parliament for another vote in early June. This clearly indicated that the May agreement on Brexit had no chance of obtaining Parliament's approval for the fourth time and was fueling new concerns about a Brexit without agreement. .
Added to this is a renewed interest in purchases in US dollars, supported by the strength of US economic data and safe haven flows, as trade tensions between the US and China worsened, exerting further downward pressure and contributed to the fifth consecutive session.
Technical levels to watch
As Yohay Elam explains, the FXStreet analyst: "The level of 1.2775 mentioned above is essential. A little lower will open the door at 1.2670 which was a low swing in January. It is followed by 1.2620, which goes back to last December. "
"The resistance is waiting at 1.2830, which was a temporary support line on the way. It is followed by 1.2900 which also provided support and 1.2925 which limited an attempted recovery, "he added.
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