GBP/USD drops to over 1-week lows, below mid-1.2600s post-UK PMI

• The USD gains traction in the wake of US-China trade war truce.
• The GBP further weighed down by persistent no-deal Brexit fears.
• Dismal UK manufacturing PMI does little to ease the bearish bias. 

The GBP/USD pair maintained its offered tone and dropped to over one-week lows, just below mid-1.2600s post-UK macro data.

Having failed to capitalize on Friday's positive move back above the 1.2700 handle, the pair met with some fresh supply at the start of a new trading week in the wake of a goodish pickup in the US Dollar demand. 

A trade war truce between the US and China dampened prospects for any aggressive Fed policy easing, which prompted some USD short-covering move and exerted some fresh downward pressure on the major.

The British Pound was further pressurized by Monday's disappointing UK manufacturing PMI, which remained in the contraction territory for the second consecutive month and fell to 48 in June from 49.4 previous.

This against the backdrop of growing concerns over a no-deal Brexit on October 31 did little to inspire bullish traders or stall the ongoing slide below three-day-old horizontal support near the 1.2660 region.

Market participants now look forward to the US economic docket, featuring the release of ISM manufacturing PMI, in order to grab some short-term trading opportunities later during the early North-American session.

Technical levels to watch