UK elections: Thursday-Friday. Brits are going to the polls less than a year after the EU Referendum after PM Theresa May called a snap election. At first, it seemed that her Conservative Party is set for a landslide victory. A wide majority in parliament would help her move to a soft Brexit, as she wouldn’t have to worry about the hardline “Brexiteers”. Since the announcement, her party is ceding ground to the opposition Labour Party. A small majority for May would be slightly disappointing while a hung parliament (as suggested in this poll) could hit the pound quite hard. Polls have a big impact on the pound. They vary quite a bit: those showing a big victory for the May’s Tories rely on a high turnout for older people, as seen in previous campaigns. Those showing a tighter race rely on an upswing in youngsters coming out to vote. During the day, we will get turnout numbers. A low turnout will help the pound and a higher one will keep it under pressure. Initial exit polls are due at 21:00 GMT and real result will drip drop from 23:00. These are the most illiquid hours of trading and movements could be significant. The full results should be clear before European markets open at 7:00 GMT.
ECB rate decision: Thursday, the decision is at 11:45, Draghi’s press conference at 12:30. Will the ECB stop seeing risks as tilted to the downside? Will they hint at the beginning of the end of QE? After reducing the amount of monthly buys of bonds from 80 to 60 billion euros, the ECB is still on course to continue with the money-printing scheme through 2017. The big question is what’s next. Given the recent improvement in the economy and expectations for higher inflation, the ECB might provide an upgraded outlook, setting the scene for an announcement about tapering QE in September. Note that this is an important ECB meeting, where they also release new forecasts for growth and inflation. In many past events, Draghi dragged down the euro. Will it be different this time? According to some reports, the ECB is set to ignore the most recent drop in inflation and upgrade its assessment.
GBP
UK elections
- EURUSD
Update: The pair is still traded right below the level of 1.1275 so we remain the same. As could be seen on the chart above that the pair is traded below a strong resistance level around 1.1300. It also matches a Fibonacci level of 0.386 (From 14.10.2014 to 03.01.2017). So, we believe that as long as the pair is traded below it, it is highly recommended to go short targeting the level of 1.1200 followed by 1.1100 during the week. On the other hand, if the level of 1.1300 is broken (by at least a daily close) then the way would be open for the pair to reach 1.1400.
| Resistance levels: | Support levels: | Recommended: |
| ▪ 1.1275 ▪-1.1300 ▪ 1.1350 |
▪ 1.1200 ▪-1.1150 ▪ 1.1100 |
We remain bearish as long as the pair is traded below the level of 1.1272. |
- GBPUSD
Update: The pair is on its way to the level of 1.3000. As could be seen on the chart above that the pair is traded right above a strong support level that could be found at 1.2750 so we believe that as long as the pair is traded above it, it is highly recommended to go long targeting the level of 1.3000 during the day. In case that the level of 1.2750 is broken, then the way would be open for the pair to reach the level of 1.2700 followed by 1.2600.
| Resistance levels: | Support levels: | Recommended: |
| ▪ 1.3000 ▪-1.3100 ▪ — |
▪ 1.2750 ▪ 1.2700 ▪ — |
We remain bullish as long as the pair is traded above the level of 1.2750. |
- GOLD
Update: The Gold may retest the broken trendline then a rebound is expected to the level of 1300. The Gold managed to reach the downtrend line shown on the chart above. We believe that as long as the pair is traded below it, it is highly recommended to go short targeting the level of 1250 during the day. This is conditioned by the continuation of trading below the downtrend line. On the other hand, if the pair managed to break through the downtrend line, then this would be very bullish for the Gold that it might reach the level of 1300 during the week.
| Resistance levels: | Support levels: | Recommended: |
| ▪ 1350 ▪ 1300 ▪ 1290 |
▪ 1250 ▪ 1220 ▪ 1200 |
We remain bullish as long as the pair is traded above the broken down trendline. |
- AUDUSD
Update: the pair managed to break through the level 0.7500 so it is on its way to the level of 0.7600.As could be seen on the chart that the pair went up once it touched the uptrend line shown on the chart in red. It may continue going up to reach the level of 0.7500 then there would be two scenarios: if the pair respects this level, then it may go down targeting the level of 0.7400. The second scenario: if the pair breaks through the level of 0.7500 then it may go up to reach the level of 0.7600.
| Resistance levels: | Support levels: | Recommended: |
| ▪ ▪ 0.7600 ▪-0.7700 |
▪ 0.7350 ▪ 0.7300 ▪ 0.7250 |
We remain bearish as long as the pair is traded above the level of 0.7500. |
- GBPJPY
Update: We remain the same as long as it is traded below the level of 144. As could be seen on the chart that the pair may continue going down to reach the uptrend line shown on the chart. This is not really a negative movement. This can support the strength of the GBP against the JPY. Let’s see what will happen.
| Resistance levels: | Support levels: | Recommended: |
| ▪ 144 ▪ 145 ▪ 146 |
▪ 142 ▪ 141 ▪ 140 |
We remain bearish as long as the pair is traded below the level of 144. |
