GBP/USD drops to session lows, around mid-1.2600s
- A modest USD rebound exerts some fresh downward pressure on Friday.
- Rising fears of a no-deal Brexit hold investors from placing bullish bets.
The GBP/USD pair extended its steady intraday decline from levels beyond the 1.2700 handle and dropped to fresh session lows in the last hour.
The pair failed to capitalize on this week's goodish rebound from the vicinity of the key 1.2500 psychological mark, or multi-month lows, further fueled by dovish FOMC statement, and once again met with some fresh supply near the 1.2725 region for the second straight session on Friday.
Currently hovering around mid-1.2600s, the pair has now eroded a major part of the previous session's positive move and also snapped three consecutive days of winning streak amid a modest US Dollar uptick - supported by a solid rebound in the US Treasury bond yields.
This coupled with the fact that Boris Johnson is still seen as the favourite to be the next British Prime minister, increasing fears of a no-deal Brexit might have prompted investors to use the recent corrective bounce to unwind any bullish positions or initiate some fresh bearish positions.
It is worth mentioning that Boris Johnson and Jeremy Hunt emerged as the final two candidates in the Tory leadership contest on Thursday. Meanwhile, Johnson has already cleared his stance to leave the EU at the end of October 2019 with or without a deal.
Hence, a follow-through weakness, amid absent relevant market moving economic releases from the UK, now looks a distinct possibility ahead of the release of the flash manufacturing PMI and existing home sales data from the US later during the early North-American session.
Technical levels to watch