Tactics and Analysis – Pound Volatility is a Certainty Today

U.K. Election Sparking Speculation

The Pound is testing important resistance in early trading this morning. However, because of the U.K election being held all day long, traders should expect whipsaw movements throughout the day.

The short-term trading indicates the 1.30 price level could be a focus for investors. But it is important to note risk sentiment will be fragile today and be effected by rumors and whispers as investors try to figure out what the results from the Parliamentary vote will be.

The election results will not be known until later tonight. The British media will not issue their projected results until the voting booths officially close. And as the night progresses and the results become clear traders will have to deal with fast moving markets.

Outcome in Question

The question investors want to know obviously is who will win the election today in Britain. Prime Minister Theresa May is expected to win control of the government with her Tory party. However, the focal point for traders will be – what is the margin of victory?

If the Tory victory is by a slimmer margin than anticipated, it could create nervous sentiment for the Pound. Because it would mean the British government could have a more difficultly negotiating a solid Brexit agreement. If Theresa May wins in a resounding fashion it will likely make the Pound stronger. If the Tories somehow suffer a shock defeat, the Pound would react with vast volatility.

Pound Future and Outlook

Day traders who venture into the Pound today will need deep pockets to withstand sudden shifts and potential spikes of value. Another late factor for the British currency against the U.S Dollar could be the political drama which unfolds in Washington today.

The Pound promises to by dynamic today and tomorrow. Traders will need to be extremely careful as they position themselves and speculate on the outcome of the U.K election. While a victory by the Tory government led by Theresa May is expected, there are no guarantees.

The Pound will likely provide traders with the opportunity to test reversals and short-term trends most of the day. But as the official closing of voting takes place and pronouncements about results start to be presented, traders must be prepared for massive volatility and speculation.

In the short term, we believe Pound may be positive. In the mid-term and long-term we are unbiased.

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