Brexit/UK political uncertainties continue to weigh on the British Pound.

The USD bulls remained on the defensive and helped limit further losses.

Investors now look forward to the UK macro data for some fresh impetus.

The GBP/USD pair witnessed some good two-way price swings on Thursday but finally settled nearly unchanged, comfortably above the key 1.2100 pivotal point. The pair continued with its struggle to register any meaningful recovery and quickly faded an intraday bullish spike to the 1.2180-85 region amid increasing odds of a no-deal Brexit on the new extended deadline of October 31. The initial leg of the downfall was triggered by a modest pickup in the US Dollar demand, which extracted some support from a goodish recovery in the US Treasury bond yields.

UK politics add to Brexit jitters; GBP looks to UK GDP

The downward spiral accelerated further - dragging the pair to fresh weekly lows - in reaction to the Financial Times report that the UK PM Boris Johnson was expected to face a confidence vote after lawmakers return from recess. The report further cited a senior 10 Downing Street official saying that if they are forced to hold a general election, it would take place days after the Brexit deadline of October 31.



Meanwhile, the greenback failed to capitalize on its intraday positive move and witnessed some intraday pullback in the wake of a sudden intraday pickup in the shared currency. Adding to this, the US President Donald Trump's fresh criticism over the Fed's monetary policy stance further collaborated towards capping any meaningful USD upside and helped the pair to quickly recover around 40-pips from an intraday low level of 1.2495.



The pair ticked higher, albeit remained well within a broader trading range held over the past 1-1/2 week or so as the focus now shifts to the UK economic docket - highlighting the release of prelim GDP growth figures for the second quarter of 2019. This coupled with the release of manufacturing/industrial production data will influence the broader market sentiment surrounding the British Pound and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the pair on Thursday already seems to have confirmed a near-term bearish breakthrough a short-term ascending trend-channel formation and hence, remains vulnerable to weaken further. However, traders are likely to wait for a sustained/follow-through weakness below the 1.2100 handle before positioning for an eventual drop towards challenging the key 1.20 psychological mark.



On the flip side, the ascending trend-channel support breakpoint - around mid-1.2100s - coincides with 200-hour SMA and should now act as immediate strong resistance. Momentum beyond the mentioned barrier could get extended back towards the 1.2180-85 supply zone en-route the 1.2200 round figure mark. The momentum could further get extended but seems more likely to remain capped near the 1.2245-50 region - marking the top end of the mentioned channel.