The British pound had its biggest rally against US dollar since 2008, after the latest Survation phone poll showed the remain in the EU camp take the lead with 45% of poll, while the leave the EU camp received 42%, a reversal of the prior June 16th phone poll. This was the first poll conducted following last week’s murder of MP Jo cox.
The Telegraph and National Centre/Financial Times poll showed the Remain in the EU camp strengthened their positions with their polls later in US. The betting odds from William Hill also showed Brexit odds implying an approximate 80% chance that the UK will stay in the EU.
Price action on the GBP/USD daily chart shows the major rally faced key resistance from the 200-day SMA. If we see sentiment continue to grow for “the remain” in the EU camp, further upside may be limited up to Thursday’s vote. Volatility is expected to be high leading up to the final outcome.
A remain in the EU outcome could see the British pound rally towards the 1.5250 region, it is around that area that price could tentatively form a bearish ABCD pattern. Point D is targeted with the 161.8% Fibonacci expansion level of the B to C leg. Over the next few weeks, we could eventually see price target the 1.60 region.
If the markets are stunned and we see a Brexit occur, sterling could fall several figures. Some are anticipating a 15%-20% decline towards the 1.15 region.
If bearish momentum accelerates, Major support will come from the psychological 1.40 handle.
The trade: Buy GBP/USD at 1.4450 with a stop loss at 1.4250 and a take profit at 1.4950. The Risk/Reward Ratio is 2:5