GBP/USD drops to fresh lows near 1.2250

The Sterling remains on the back footing so far this week, with GBP/USD dropping to test fresh lows in the mid-1.2200s.

GBP/USD weaker on ‘hard Brexit’, USD

The ongoing USD rally keeps weighing on the sentiment around the risk-associated space, dragging the pair to the area of 2-day lows in the 1.2250/55 band.

In the meantime, GBP remains under pressure in light of Friday’s still unexplained ‘flash crash’ to the mid-1.1800s and heightened concerns over the implications, both political and economic, of a ‘hard Brexit’.

Earlier in the European session and under the Treasury Select Committee Hearings, MPC M.Saunders said that the central bank has not run out of easing alternatives, while he added that rates could slip towards the zero level, but not below.

In the same line, MPC A.Kashyap said he is ‘very concerned’ on a potential slowdown in the UK economy following the ‘Brexit’ vote.

Later in the NA session and on the US data front, the Fed’s Labor Market Conditions Index is due ahead of the speech by Minneapolis Fed N.Kashkari (2017 voter, neutral).

GBP/USD levels to consider

As of writing the pair is losing 0.72% at 1.2283 with the next support at 1.1841 (low Oct.7). On the flip side, a breakout of 1.2772 (high Oct.5) would expose 1.2839 (20-day sma) and then 1.2931 (near term resistance line).