British pound was sharply down after results of UK general election were out and showing that Conservative Party lost majority in the parliament. Nightmare scenario for UK PM Theresa May’s party, as calls for May to resign came immediately after election results.
Since no single party having a clear majority to form the government, the country may fall into political turmoil that could also disrupt Brexit negotiations, just days before start of official negotiations on Britain’s divorce from the EU.
The pound surged through important support at 1.2770 (former higher base/daily cloud top) which generated strong bearish signal, as strong acceleration lower completed Failure Swing pattern on daily chart, confirming strong bearish stance.
Sterling resumed downmove in early hours of European session after consolidation attempts in late Asian hours, signaling strong bearish pressure is building up.
Immediate support at 1.2625/16 (Fibo 61.8% of 1.2365/1.3047/100SMA) is under pressure and further weakness may extend through 200SMA at 1.2576 towards 1.2548 (daily cloud base) and 1.2500 zone (the lowest level before PM May called for snap election).
Political uncertainty is expected to keep sterling under increased pressure, along with technical studies which are firmly bearish on lower timeframes and turning into bearish setup on daily chart.
Meantime, limited corrective actions could be expected, with former strong support at 1.2770 now acting as solid resistance and expected to cap.
Res: 1.2706, 1.3770, 1.2806, 1.2841
Sup: 1.2625, 1.2576, 1.2548, 1.2500
