UK : May calls for election in June ….. GBP bounces above 1.28

 

Theresa May unexpectedly announced early elections yesterday : Forex markets pushed GBP at 6 months high as this is seen as a move for UK Prime Minister to secure political unity and reduce the risk of a much anticipated and GBP bearish « Hard Brexit » . Deutsche Bank  considers this early election as a complete « game changer » for Sterling and immediately cancelled its bearish view on the currency. UBS on its side sees the Pound at 1.36 versus USD in the year.

 

The below chart is an update of one posted in October 2016   ( link here : Post Dated Oct.19th 2016 ) where i mentionned that short term reactions would be limited to the 1.26 -1.28 range which happened 3 times so far. Yesterday’s move to above 1.28 brings GBP one step further with a clear (if confirmed) break of the 200D MA . Technical pattern is quite bullish with a break of july and august bottoms and of previouly mentionned tops in the 1.26-1.28 range. Short to mid term Bullish as long as above 1.26 is maintained .  Let’ s look now on the long term chart …

… The very long term  chart is an update of one posted on October 7th  2016, the day of GBP flash crash . We can clearly see the bottoming process that took place in last months with higher lows . The conclusion remains the same i.e a clean break above 1.32-1.33 on a monthly basis is needed to become again long term Sterling bullish .