GBP/USD refreshes session lows, back below 1.2500 handle
- News of potential ministerial resignations exerts some pressure in the last hour.
- Tempered Fed rate cut bets underpins the USD and added to the selling bias.
The GBP/USD pair finally broke down of its Asian session consolidation phase and dropped to fresh session lows, around the 1.2475 region in the last hour.
The latest leg of a sudden drop of over 35-pips, dragging the pair farther below the key 1.2500 psychological mark came in reaction to the UK political headlines, suggesting that the ministerial resignations could begin later this Monday.
It is worth reporting that UK chancellor of the exchequers Phillip Hammond, along with the Secretary of State for Justice and Lord Chancellor David Guake stand ready to resign if Boris Johnson - the frontrunner, becomes the next British PM.
On the other hand, the US Dollar remains supported by St. Louis Fed President James Bullard's comments on Friday, saying that a 25 bps rate cut seems appropriate as the current US economic condition doesn't warrant a larger cut.
The downside, however, remained limited, at least for the time being, as investors still seemed reluctant to place any aggressive bets ahead of the Tory leadership voting results, expected to be announced on Tuesday, and absent relevant economic data.
Hence, it would be prudent to wait for a strong follow-through selling before traders start positioning for the resumption of the pair's well-established bearish trend and a possible move back towards challenging 27-month lows set last Wednesday.
Technical levels to watch