GBP/USD off lows around 1.2150, Brexit still weighs

The selling bias around the British Pound remains intact on Tuesday, with GBP/USD managing to bounce off lows near 1.2130 and clinch the mid-1.2100s ahead of the opening bell in Euroland.

GBP/USD weaker on ‘hard Brexit’ prospects

The pair continues to navigate the area of 3-month lows today, as prospects of a ‘hard Brexit’ seemed to have re-emerged following PM Theresa May’s comments over the weekend.

GBP reacted accordingly, shedding more than 3 cents since Friday’s tops near 1.2440 to Monday’s low in the vicinity of 1.2120.

The recent price action unveiled market fears of the potential political and economic consequences of a ‘hard Brexxit’ scenario, leaving behind the (temporary) optimism following auspicious results in UK fundamentals as of late.

In addition, speculative positioning is also keeping the Sterling under pressure, as net shorts have climbed to 3-week tops on the week to January 3 according to the latest CFTC report.

GBP/USD levels to consider

As of writing the pair is retreating 0.12% at 1.2146 and a break below 1.2122 (low Jan.9) would open the door to 1.2112 (low Oct.28) and then 1.2081 (low Oct.25). On the upside, the initial hurdle lines up at 1.2305 (20-day sma) followed by 1.2415 (55-day sma) and finally 1.2431 (high Jan.6).