U.K. Prime Minister surprised the market by announcing that she calls early elections on June 8th. The British pound culminated after the statement while FTSE 100 sank, recording lows. German government suggested an ECB rate hike while market expects Eurozone’s CPI today.
Pound Surged as U.K. PM Calls Early Elections
The British pound climbed as U.K. Prime Minister Theresa May called to snap election on June 8th. May shocked the world as the next elections were scheduled for 2020. Prime Minister, with such act, aims to strengthen her parliamentary majority before the final Brexit deal with the European Union. Sterling ended the day significantly higher against all the G10 currencies, rose 2.20%, nearly 400 pips versus the greenback to a six-month high, slightly above 1.2900. The euro followed the pound and the GBP/EUR pair dropped more than 1.30% to a four-month low as traders are very cautious to opening euro positions ahead of the French elections on Sunday. The British stock index FTSE 100 plunged severely as stock investments are not favoured by uncertainty in the market.
GBP/USD – Technical Outlook
Sterling had an aggressive bullish run against the greenback yesterday as the British pound dominated the market. The GBP/USD pair advanced to a fresh six-month high and tested the 1.2900 strong psychological level. Also, the cable surged more than 2% in just one daily session and broke to the upside the medium-term trading range with lower boundary the 1.1978 and upper boundary the 1.2700 key level.
It is worth mentioning that the pair managed to reach our suggested target with profit more than 130 pips at 1.2700 and surpassed it easily (see technical analysis here: https://bit.ly/2pQnhWq). The next immediate resistance to watch is the 1.2920 barrier and then there is no obstacle until the 1.3050 handle. On the daily chart, the price jumped above the three simple moving averages while it rebounded on the 200-SMA and climbed almost 400 pips. Going to the 4-hour chart, the technical indicators seem to be in contrast, however, both are moving in the overbought area. The MACD oscillator is holding above its trigger line with strong momentum whilst the RSI indicator is sloping to the upside signalling a possible correction until the 1.2780 support level.
Read the full article on JFD Research.