GBP/USD retreats to the lower end of its daily range, holds above mid-1.2600s

   •  Reaction to May’s announcement to step down turned out to be short-lived.
   •  Renewed fears of a no-deal Brexit promoted some fresh selling at higher levels.
   •  Weaker US data kept the USD on the defensive and helped limit the downside.

The GBP/USD pair extended its intraday retracement slide from levels beyond the 1.2700 handle and is currently placed at the lower end of its daily trading range. 

With investors looking past upbeat UK retail sales data, the UK politics once again dominated the headlines on Friday and turned out to be one of the key factors influencing the sentiment surrounding the British Pound. The UK PM Theresa May announced that she will be stepping down as Party leader on June 7th and the market reacted positively, providing a minor boost to the Sterling and lifting the pair to an intraday high level of 1.2718.

The uptick, however, turned out to be short-lived, rather met with some fresh supply at higher levels speculations that a pro-Brexit hardliner might lead the UK into a no-deal split. Moreover, the fact that Brexit impasse will remain regardless of a new leader, which further collaborated towards to the pair's intraday pullback of around 70-pips.

The latest comments by the UK lawmaker Boris Johnson - a leading candidate to replace Theresa May, saying that we will leave the EU on Oct. 31, with or without a deal, and the way to get a good deal is to prepare for a no-deal scenario also did little to impress the GBP bulls.

Meanwhile, the US Dollar held on the defensive following the disappointing release of US durable goods orders data and retreated farther from two-year tops set in the previous session, which eventually turned out to be the only factor helping limit further downside at least for the time being.

Technical levels to watch