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British Pound Virtually Unchanged Ahead Of U.K. Election

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Dear Traders,

The British pound gapped slightly lower after the latest terror incident in London, in which seven people were killed and 48 were injured. The attack comes just days before the June 8 general U.K. election which is considered a big event for sterling traders. The latest polls indicate the Conservatives’ lead over Labour has shrunk to between 1 and 12 percentage points, indicating a tightening race. If Prime Minister Theresa May is not getting the increased majority she is hoping for, sterling could suffer further losses.

Friday’s NFP report proved disappointing even if the May jobs data were not bad enough to curtail the expectations for a Fed rate hike this month. While the U.S. dollar remained under selling pressure, the euro benefited the most from the greenback’s weakness and rose to a high of 1.1285. It will now be interesting whether the euro is able to tackle the hurdle at 1.13. Above that level, we see a next resistance at 1.1350, whereas the 1.12-level could lend a short-term support for the euro.

GBP/USD

In short-term time frames we see that prices narrowed, formatting a symmetrical triangle which could predict upcoming price breakouts. A break above 1.2910 could result in an upswing towards 1.2950 while a decline below 1.2850 could drive the pound lower towards 1.28.

This week’s economic calendar is fairly light in terms of market moving data. The only highlight will be the U.K. election and the European Central Bank meeting on Thursday which can be market moving events.

The service-sector ISM survey is scheduled for release today at 14:00 UTC but with the NFP report behind us, this report might not attract much attention.

In short, it could be a quiet start to the new week but let us be surprised.

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How High Can Sterling Go? Watch Out For A Reversal

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Dear Traders,

The best performer Tuesday was the British pound which rallied above 1.32 and headed for a test of the resistance level at 1.3340. The recent relief rally was due to a lower degree of political uncertainty with Theresa May preparing to take over as the U.K.’s next prime minister. Investors hope that the whole process of Brexit uncertainty could now be shortened and therefore showed greater readiness to take risks. However, we don’t expect the recent uptrend to be sustained as the pound’s next risk event will be Thursday’s monetary policy decision. The Bank of England is expected to take a much more aggressive tone and cut interest rates by the end of summer. Given that dovish tilt it will be difficult for sterling to hold onto its recent gains.

Once sterling is able to climb above 1.3360, it could even head for higher targets around 1.3480. We already achieved a good profit with our long-entry at 1.3065, which is used as a swing trade. Additional swing and long-term entries are only available to subscribers of our signal service. If sterling drops back below 1.32/1.3180 we expect bearish momentum to increase, driving the pound towards 1.29.

The euro’s modest performance continued on Tuesday and it seems as though investors have withdrawn from the EUR/USD, making it an unattractive currency pair to trade. As long as the euro remains within its range between 1.1130 and 1.10, we will have to be patient and wait for price breakouts above or below that zone. Above 1.1130, the euro might be able to climb towards 1.1165 and 1.1185 but for the time being, any upward movement could be limited until these resistance levels. After a break below 1.0970 we expect bearish momentum to increase, driving the pair towards 1.0940 and 1.0830.

There are no major economic reports scheduled for release today. Eurozone Industrial Production figures (9:00 UTC) and the U.S. Import Price Index due at 12:30 UTC could have a minor impact on the currencies.

Daily Forex signals:

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2016 Maimar-FX.

www.maimar.co