GBPUSD is pulling up to the broken support level around the 1.2500-1.2600 area, which might be enough to hold as resistance. This is spanned by the 38.2% to 50% Fibonacci retracement levels that could keep gains in check.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect stronger selling pressure while the 200 SMA is around the top of the area of interest to add to its strength as resistance.

A larger pullback could still last until the 61.8% level at 1.2840, which might be the line in the sand for a correction. RSI already looks ready to turn lower after a brief stay in the overbought zone, suggesting that sellers are eager to return. Stochastic is also indicating overbought conditions and is starting to point down again to show that bearish pressure might pick up.

The UK Supreme Court is due to announce its ruling on the prorogation this week, possibly setting the tone on a “no deal” Brexit outcome or further political chaos. Deciding that the decision of PM Johnson to prorogue was unlawful could give lawmakers room to block a “no deal” Brexit by October 31 and also prevent another attempt to shutdown Parliament.

Meanwhile, the dollar could take its cues from speeches by FOMC members as a handful are set to deliver testimonies throughout the week. Dovish remarks supporting further easing could weigh on the US currency while reassuring comments could provide some support.

Risk sentiment would likely push dollar pairs around as well, and this could mostly hinge on how US-China trade talks pan out, as well as other geopolitical risks like those stemming from the Middle East.