GBP/USD hit one-month low, eyes UK election campaign

The GBP/USD pair dropped to 1.2775 on Friday; its lowest level since April 25 after the UK election polls showed Conservatives are losing ground.

The situation appears to have worsened further for PM May’s Conservative party. The various polls published over the weekend showed May's Conservative party lead is narrower than previously thought. For Example, according to a weekend poll by ORB, the Conservatives stand at 44 vs. Labour 38. The 6 point lead is much narrower than a 12 point lead in the same poll a week before.

11-week rally has ended

Friday’s close (1.2805) was well below the support offered by the trendline sloping upwards from the March low and April low. The breach of the rising trendline signals the 11-week rally has ended.

Extra programs with UK political leaders

Campaigning for the June 8 election, which was suspended in the wake of the Manchester terror attack, resumed on Friday and is set to gather pace this week.

UK PM Theresa May and opposition leader Jeremy Corbyn are expected to field take questions from the audience for 45 minutes each, in a joint programme between Channel Four and Sky News. On Wednesday, the BBC will host a 90-minute debate fronted by Mishal Husain. 

The Conservative and Labour contenders for PM will again take questions from audience on Friday.

Traders need to keep an eye on fresh polls which will be released after every debate/appearance by the Conservative and Labour contenders. The British Pound does not seem to like the fact that Labour is gaining ground.

Thus, GBP could be offered if the PM May/Conservatives put on a poor show at the various public appearances today and during the week ahead.

GBP/USD Technical Levels

The rising trend line is seen offering resistance around 1.2840; which, if breached would open doors for a revisit to 1.29 (5-DMA) and 1.2936 (10-DMA). On a larger scheme of things, only a daily close above 1.30 would revive the bullish view.

On the other hand, failure to hold above 1.28 (zero figure) could yield a sell-off to 1.2734 (upward sloping 50-DMA). A daily close below the same would open up downside towards 1.2615 (Mar 27 high) - 1.2597 (200-DMA).

Note - The daily RSI has turned bearish (below 50.00) and the MACD shows the bearish move is gathering pace.