The last days, sterling is prone to anything published regarding the U.K. election. A series of polls yesterday which were in conflict put the sterling on a crazy ride. The first poll released yesterday early in the Asian session, from YouGov, suggested that Conservatives might fall 16 seats short of an overall majority and Labour could up their tally of seats by almost 30. The poll disappointed the current government as U.K. Prime Minster Therese May called for a snap election in the hope of winning a bigger majority in parliament and thus, more strength to negotiate U.K.’s withdrawal from the E.U. Later in the day, other polls helped the pound to recover and the new polls coming out are driving the currency in both directions.
GBP/USD - Technical Outlook
The GBP/USD pair created a neutral to negative month and snapped a two-month winning streak. Sterling ended the month near its opening level against the greenback while during yesterday’s session the pair climbed above the 1.2890 resistance barrier at 1.2920. The price struggled within the 1.2775 – 1.2890 consolidation area and rebounded several times on the 50-daily SMA. The most probable scenario is a run above the 1.2890 resistance barrier until the 1.3050 handle. On the other side, a drop beneath 1.2775 will open the way for the 1.2620 support handle.
From the technical point of view, the RSI indicator lies near the 50 level and is moving with some weak momentum. Moreover, the MACD oscillator is falling into the positive area and holds below the trigger line. Though, the stochastic oscillator is endorsing our bullish thought as it created a bullish crossover within its moving averages.
Analysis by JFD Research