Bulls hit by election results
It was not that what Theresa May was expecting after snap elections. The ruling party decided about early election to increase its lead. As a result, she lost 13 seats in parliament losing the right to rule independently.
Market reaction to this result was weakening of GBP to all currencies. The main reason for the weakening is the uncertainty that emerged after the election. It is not known which party will create the government and whether the UK awaits next election due to the inability to form a governing coalition.
GBPUSD – bears target 1.2570 and triangle resistance.
GBPUSD has two possible scenarios. The first is to return of price above 1.2740 support, then today’s breakdown of support could be treated as a false breakout. The second scenario is the test of nearest support at 1.2570. Currently this support is further reinforced by the upper limitation of the triangle from which pair broke out in mid-April. Today’s session is therefore crucial for the further fate of the GBPUSD, and the levels that are now mandatory to observe are 1.2570, 1.2740.
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GBPUSD – Broken Support at 1.2740