GBP/USD hovers near 31-year lows

GBP/USD fell sharply on Tuesday, extending previous day’s losses and hit its lowest level since 1985, weighed by renewed Brexit concerns after UK PM May said Monday that the UK would start the Brexit process by the end of March.

The pound came under renewed pressure and dropped to a fresh 31-year low of 1.2735 against the greenback. The pair found support and managed to recover a few pips to trade around 1.2765, down 0.57% on the day.

GBP/USD broke below significant chart support at $1.2750 Tuesday, which marks the long-term 76.8% Fibonacci retracement of sterling's rise from a record low 1.0463 in 1985 to 2.1166 in 2007, says Commerzbank technical analyst Karen Jones. A daily close below 1.2750 would be very negative and see GBP/USD target 1.22 by the year-end, said the analyst.

GBP/USD technical levels

In terms of technical levels, next supports are seen at 1.2700 (psychological level ) and 1.2600 (psychological level). On the flip side, resistances are seen at 1.2859 (Oct 4 high), 1.2962 (10-day SMA) and 1.3000 (psychological level).