GBP/USD looks to extend the bounce above 1.2000

Despite the recovery from lows near 1.1980 in the Asian trading hours, GBP/USD remains weak and struggling to keep the trade above the 1.2000 handle.

GBP/USD tumbles on Brexit concerns

The likeliness of a ‘hard Brexit’ scenario has picked up extra pace at the beginning of the week following increasing unease prior to the speech by PM Theresa May on Tuesday.

In fact, news over the weekend said that PM T.May could unveil her views that the UK should withdraw from the single market and the customs union, adding to the Eurosceptics stance. May is said to be expecting to reach trade deals with New Zealand, America and India among another countries

Spot has opened with a gap lower to the vicinity of the 1.1980 area, levels last seen in early October following the GBP’s ‘flash crash’, although it has managed to at least retake the 1.2000 key barrier.

Later in the session, Governor M.Carney is due to speak at the London school of Economics, ahead of inflation figures (Tuesday), labour market report (Wednesday) and retail sales (Friday).

From the positioning side, GBP speculative net shorts have climbed to 4-week highs on the week to January 10, as per the latest CFTC report.

GBP/USD levels to consider

As of writing the pair is losing 1.08% at 1.2043 and a breach of 1.1988 (low Jan.16) would open the door to 1.1450 (GBP ‘flash crash’ Oct.7). On the flip side, the next hurdle aligns at 1.2119 (low Jan.13) followed by 1.2242 (20-day sma) and finally 1.2318 (high Jan.12).