The pound remains under a heave selling pressure with the short-term outlook has deteriorated after attempts to break the 1.28 handle yesterday. GBPUSD             has settled marginally above this level on Friday but more challenges will likely come in the days ahead.

First, Brexit issues continue to discourage the GBP bulls. The fact that Prime Minister Theresa May has strengthened her position after her recent speech doesn’t bring any relief to sterling. The Irish border issue is still unresolved, and the risk of a no-deal divorce remains.

Second, interest rate hikes expectations could decline even further next week if the Bank of England downgrades inflation or growth outlook on ‘Super Thursday’ next week. Traders will pay a close attention to the Quarterly Inflation Report, while no changes to monetary policy are expected.

Third, the greenback demand remains robust due to solid US economic fundamentals and hawkish Fed. The dollar is supported by heavy month-end rebalancing as well.

As such, the risk challenging the 1.28 figure remains high, and after a potential break below the 1.2785 support, GBPUSD             will target 1.27 and then – 1.2660, where mid-2017 lows lie.