Latest Election Poll Batters The Pound

Originally published by AxiTrader

The danger of taking the electorate for granted, for circumventing rules aimed at establishing fixed term elections in the UK, and the potential to misjudge the country's mood are all in stark contrast this morning as the latest polls suggesting the Conservatives may lose - yes lose - seats at the June 8 election hit the wires.

The Times reports a "controversial YouGov estimate points to a hung parliament with 20 fewer seats for May". That's a long way from the 100 seat majority that was floated when Theresa May first called this snap election.

Indeed the Times says "The central projection of the model, which allows for a wide margin of error, would be a catastrophic outcome for Theresa May, who called the election when polls pointed to a landslide result. Her support appears to have plunged after the poor reception of the party manifesto, including plans to make more elderly voters pay for home care".

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Naturally, British Pound (USD) came under pressure as a result of the news hitting the wires. That drove it down below 1.2800 to a low of 1.2790 before the mild recovery we are seeing at present.

No doubt the recovery is in no small part because, as the Times says it is a controversial poll, with many other polls pointing to a stronger Tory victory.

The reality is the vagaries of polling, the efficacy of their processes, and the flow of the results is going to drive GBP over the next week. As traders we can't do anything about that. But it does seem - and this morning's price action suggests - uncertainty is growing. And that's making traders nervous and a little skittish.

We can't really know how the polls will flow or how the election will play out but we can look to the price action as a guide.

And on that front the repeated failure to break important 1.3050/60 resistance, the break of the uptrend line from the recent move, and the failure to recapture the trend all suggest that a garden variety move back to the 38.2% retracement level in GBP/USD is in the offing. 1.2680/90 is the target.

My system is already short as I have written recently. But in the immediate term, a move in GBP/USD under 1.2770 or a move up through 0.8750 in Euro (GBP) would signal the next move in the pound has begun.

Here's the daily GBP/USD chart.

Chart

Have a great day's trading.