GBP/USD has rallied around 3.14% since Theresa May announced a snap general election, as markets largely priced in a Tory victory.
GBP/USD has been trading above the downside uptrend line support since May 31st.
Today is the market-focused UK general election.
The Tories are expected to remain in power, however, now it is hard to predict to what extent. Recent YouGov forecasts indicate the Tories are likely to win less than the current number of seats they hold.
This morning, in early European session, GBP/USD edged up and was trading in a range between 1.2950 – 1.2980.
However, it was followed by a correction in the afternoon session, and the increased bearish momentum is currently testing the uptrend line support on increased market concerns.
If the election result turns out to be disappointing, it will likely lead to a sharp fall in GBP and test the significant psychological support line at 1.2800. If it is broken, the bears will likely further test the next psychological support at 1.2700.
Conversely, if the Tories increase their majority notably it will likely ease market concerns and lead to GBP rising.
The resistance level is at 1.3000 followed by 1.3050, 1.3100 and 1.3200.
The support line is at 1.2900 followed by 1.2800 and 1.2700.
Different results will lead to different market reactions. Be aware that GBP crosses are likely to be volatile before and after the release of the election outcome.