The GBP/USD pair stalled its four-day bullish streak and got heavily sold-off in Asia, as markets reacted negatively to the EU-Brexit Summit outcome, following reports that the EU took just four minutes to agree a hardline stance on Brexit.
In response to the above-mentioned headlines, the UK PM Theresa May renewed threat to walk away from EU without a deal, which swept the floor off the pound.
Moreover, the US dollar staged a comeback against its main rivals after Friday’s poor US GDP and consumer sentiment data. The USD index bounced-back to 99 handle, extending recovery from multi-month lows reached last Friday at 98.58.
The sentiment around the greenback was lifted after the US congressional aides reported that the congressional negotiators reached a deal to fund the government through until September.
In the day ahead, the spot may remain under pressure, extending its corrective mode from seven-month tops, as the USD is expected to remain in demand ahead of the US treasury secretary Mnuchin’s speech and US data flow.
Meanwhile, holiday-thinned trading is expected to persist as London markets are closed today in observance of May Day.
GBP/USD Levels to consider
A break above 1.2948 (daily highs) could lift the pair above 1.2970 (7-month tops), beyond which a test of 1.3000 (psychological levels) is imminent. Conversely, a break below 1.2884 (Apr 28 low), leading to a subsequent break below 1.2863 (10-DMA) is likely to drag the pair towards testing its next support near 1.2803/1.2800 (Apr 26 low/ round figure).