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GBPUSD: Key Levels to Watch Following the UK Election

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The GBPUSD tumbled 250 pips immediately following the exit poll from Thursday’s UK election. Although the extent of the drop is somewhat surprising, I can’t say I’m overly surprised given the bearish pattern that had formed following the May 26th selloff.

The pair is currently off today’s low by more than 100 pips, suggesting there are those who believe the currency moved too far too fast. However, the 1.2770 handle appears to be the big hurdle for buyers in today’s session.

Notice how 1.2770 attracted a bid in late April as well as the 26th and 31st of May. It’s also the December 2016 high, making it a level to keep an eye on as we move forward.

If the GBPUSD closes today’s session below the 1.2770 area, it would suggest an imminent move lower, perhaps toward 1.2560 or even 1.2410. Alternatively, a daily close back above 1.2770 would at least delay that bearish scenario from playing out next week.

Keep in mind that today’s bounce was triggered by another prominent level at 1.2670. This is the November 11th high from last year and also capped several advances in late January and early February of this year.

In summary, a daily (and weekly) close below 1.2770 would likely attract offers on a retest of the area as new resistance. Key support comes in at 1.2670 followed by 1.2560. My near-term target for the pair remains 1.2400.

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GBPUSD daily chart

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