The UK Prime Minister Theresa May made a speech this morning at 10 Downing Street.
She stated that the Cabinet had agreed to call an early general election, to be held on June 8. The UK government is determined to execute Brexit process and negotiation with the EU, and this is the right decision for the country’s interests. The post-Brexit vote economic indicators have shown that the UK economy is more solid than expected to withstand Brexit impact.
However, some other political parties are still against Brexit and the deal the UK reach with the EU, such as the Labour, Liberal and Scottish National Party. Although the Conservative Party is the majority in the Parliament. Nevertheless, the unity of other opposing parties will outnumber the Conservative, and hence it will weaken the UK government’s negotiation position with the EU.
In order to remove the political opposition and eliminate uncertainties, Theresa May attempts to increase the number of Conservative MPs by moving forward the general election.
GBP/USD has been trading above the downside uptrend line support since April 10.
GBP/USD saw a dramatic reversal this morning. It surged after the speech with strong bullish momentum on realization of speculation, hitting the highest level of 1.2678 since February 2, breaking the psychological resistance level at 1.2600. The intra-day volatility is around 160 points, marking the biggest intra-day volatility since February 7.
The bulls are currently edging up, with an attempt to test the next significant resistance level at 1.2700. However, the level is the mid-term major resistance level, where there is heavy pressure, be aware that the bullish momentum is likely to be restrained while nearing the level.
The resistance level is at 1.2680, followed by 1.2700.
The support line is at 1.2650, followed by 1.2620.