08:47, 28 May

Trades Around Key 1.27 Level after PM May’s Resignation

In the last few days the GBPUSD has done well to rally a little and get its head back above the current key level of 1.27. In the last few weeks the GBPUSD has fallen sharply from the key level at 1.32 down to a five month low near 1.26 before rallying to finish last week. It had previously done well to rally from a two month low up to the 1.32 level before sellers jumped in and turned the sterling away strongly.
It spent around six weeks or so falling lower from a nine month high near 1.34 back down to the two month low before the rally, with that medium term trend now being extended with the recent decline. In the present rally, it will be doing well to return to around 1.29, which is the level of the previous trough.

There are few signs of any support presently and even if it does rally a little, it faces possible further resistance at the 1.32 level again. In early March the GBPUSD fell sharply from an eight month high back down below the key level of 1.32 before rallying again and reaching a nine month high shortly afterwards. Late February was significant as the sterling moved so strongly breaking through the key level for the first time in many months on its way to the eight month high. The other key level presently is 1.27 which may be called upon should the GBPUSD continue to fall lower from its present trading levels.

The sterling enjoyed a very positive January as it has moved from below 1.27 up to a three-month high at the resistance level around 1.32, before a subsequent decline. Starting in mid-December, the GBPUSD had slowly but steadily climbed higher from a two year low below 1.25 up to the current key level of 1.27 and beyond. As expected, it met some resistance from the 1.27 level at the end of last year as multiple attempts to push higher were thwarted and now that it has cleared, you could expect the pound to receive some support from this level should it be called upon.

Eventually the beleaguered British Prime Minister Theresa May ran out of allies and options and resigned from her position last Friday.  Former Welsh secretary Stephen Crabb has said that Theresa May had an "almost impossible job" as prime minister.  Leading Welsh Conservatives have paid tribute to Mrs May after she announced the timetable for her departure.British MP David Jones said it was "very distressing" to see someone go in such circumstances, but the resignation would be a "great relief" to the Conservative party.  The frontrunner to replace May as prime minister, Boris Johnson, has told an economic conference in Switzerland that Britain should be prepared to leave the EU with no deal.  "We will leave the EU on October 31, deal or no deal," he said, according to Reuters.  "The way to get a good deal is to prepare for a no deal," Johnson added. Economists have warned of the financial impact of a no-deal split, but most of the Conservative leadership prospects have supported such a scenario.