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GBPUSD - Surges to Above 1.22 after PM Loses Election Call



GBPUSD - Surges to Above 1.22 after PM Loses Election Call
In the last 24 hours the GBPUSD has enjoyed a strong surge higher to a one week high after threatening to break lower through the current key support level at 1.20. The sterling did meet some resistance around 1.23 two weeks ago and this may put a lid on any enthusiasm for it to rally much higher. For the last month the GBPUSD has been able to consolidate and receive solid support off the 1.20 level, allowing it to stop the rot and take a breather from its drastic falls in the last three months.

In late July, the GBPUSD fell heavily from 1.24 down to its present trading levels, although it had been declining for several weeks after falling through the key 1.27 level.

It was only at the end of June that the GBPUSD reached a one month high near 1.28 before its steady but strong decline in the time since. The sterling has been attracted to the 1.27 level for the last two months as the GBPUSD has been content to trade very little and consolidate right around this level, up until several weeks ago. This level may offer some resistance should the GBPUSD rally higher.

Significantly through most of May, the GBPUSD fell sharply from the key level at 1.32 down to the five month low before the recent consolidation around 1.27 and fall down to 1.25. Earlier this year it was trading strongly above the 1.32 level and looking poised to push through 1.34 and attempt to regain a lot of lost ground from previous years. There are few signs of any support presently and even if it does rally a little, it faces possible further resistance at the 1.27 and 1.32 levels again.

British Prime Minister Boris Johnson has failed to call a snap general election on Wednesday, after lawmakers voted through a bill that aims to stop a no-deal Brexit.  The British PM still has other options to get an election called although these are a little unorthodox.  The PM could be forced to ask the EU for another delay for the U.K.’s departure of 31st October, after new legislation to stop a no-deal Brexit was passed by a vote of 327-299.  The EU would have to agree to a delay, which is far from a certainty.  On the flipside, an economist has suggested that a no-deal Brexit may not be as bad as many are believing.  The Chief global economist at Principal Global Investors suggests that the ongoing uncertainty about how the United Kingdom will leave the EU is causing significant harm to businesses and their planning.  “Some kind of exit from the European Union will at least give businesses some certainty, and that’s what’s been the problem,” the economist said.  “I think even if there’s a problem with the economy for a short time, that certainty is going to help businesses plan for the future, be able to invest, be able to hire. So, I think that’s a hugely positive thing that people are missing.”

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