If the UK wasn’t holding a General Election tomorrow, the GBP/USD looks a banker SELL from a technical standpoint. Price has spiked through the 200sma on the H4 time frame and this move was strongly rejected and the current H4 candle has opened under the 200 and is struggling to regain that level.
Adding to the BEARISH pressure is the WR1 Pivot resistance at 1.2933 so the BULLS look to have it all to do to make progress and the path of least resistance is south.
Tomorrow the UK goes to the polls.
There will be 4 possible outcomes.
A large Tory win.
A small Tory win
A small Labour win
A hung Parliament.
If the Tories gain a large win then all GBP SHORTS are doomed as the GBP will advance strongly.
If the Tories gain a small win then the GBP is likely to fall.
If Labour gain a small win, GBP will drop sharply.
A hung Parliament will see the GBP collapse.
The most likely outcome is a small Tory win or a hung Parliament.
Both these results will be GBP negative.
Key will be exit polls and early results. If there is even a small hint that the Tories may not do well the GBP will start selling off. ANy lost Tory seats will accelerate losses.
Conversely, any significant Tory gains will see the GBP advance.
We are SHORT from 1.2859 but we could see a lot of noise in the markets over the next 48 hours. For a 60 pip risk though this looks like a solid trading opportunity.