GBP/USD drops sharply to 1.2870, UK politics/ fundamentals weigh

The GBP/USD pair failed to sustain the recovery above 1.29 handle, and took a sharp U-turn over the last hour, as the bears look to test the 1.2850 support.

GBP/USD drops back below daily pivot at 1.2887

The major looks vulnerable amid looming political uncertainty surrounding the UK, as the UK PM Theresa May approaches 12 months in 10 Downing Street, with the snap election debacle under her belt and an impending Brexit deal.

EU Parliament may veto UK citizen's rights offer.

Moreover, the latest series of downbeat UK fundamentals also keeps the sentiment around the pound undermined, as investors fear that the poor macro news could keep the BOE away from maintaining its latest hawkish twist.

Further, renewed weakness in oil prices combined with fresh USD buying across the board, also collaborates to the latest leg lower in the spot. The US dollar remains broadly underpinned, as the bulls continue to ride higher on upbeat US payrolls data released last Friday.

Focus now remains on the US labour market conditions index for fresh trading impetus, as the UK docket remains data-dry today.

GBP/USD levels to consider             

Jim Langlands at FXCharts noted, “The momentum indicators are mixed, with the short term charts telling us little, although the 4 hour charts could be hinting at further losses ahead.  If so, below the Fibo level at 1.2860 would find little support ahead of 1.2810, and a break of 1.2790 could have us quickly back at 1.2750.”

“On the topside, sellers will be seen at 1.2935 and then again at 1.2985/1.3000 ahead of the trend high of 1.3047. Beyond there would take a look at the long term triangle top at 1.3060, which should be strong resistance if we see it. If 1.3060 is taken out look for an acceleration towards 1.3120 and then possibly on towards 1.3300,” Jim added.