We have seen some strong selling on the pound over the last three days. The close of the week on Friday in particular saw a frenzy of sellers with the GBPUSD cross closing at 1.5137 on Friday. This week has started with the bears firmly in control pushing the pair to the round number 1.51.
A couple of things weighed on the Pound last week:
- US initial jobless claims report showed the lowest number of sign ups for benefits in the US for fifteen years. This may support the Fed raising rates in September. In contrast, the BoE policy looks to remain unchanged for the rest of the year.
- Disappointing Manufacturing PMI
- UK election uncertainty
- Broad US Dollar strength
UK Election Fear Weighing On The GBPUSD
There is likely to be some volatility and downwards pressure on the GBPUSD this week regardless of the result of the election on Thursday. The uncertainly around a hung parliament and the risk to the UK’s membership of the EU are two of the major concerns for traders. And if there is one thing markets hate, its uncertainty.
The Technicals on Monday 4th May.
For now, the 1.5050 looks like it may give some support:
- its at the half way back of the previous bull move
- its at a trend line retest
- previous chart structure
Its likely this level will not hold given the strong supply and the trend line break could begin to act as resistance to trade short from. The next demand level of interest is at the 1.4975.
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