Currency Mugging: British Pound Gets Hit

The British Pound took another beating following the U.K. general election.

Theresa May’s Conservative government lost the majority it held prior to the election and the U.K. is now left with a hung parliament.

UK Election Results

As you can see on the Monthly chart, GBP/USD was at -0.0221 mid-day Friday, trading well below major resistance at 1.4000, after its meteoric plunge from 1.5000 following the Brexit vote on June 23, 2016.

The pound had risen in anticipation of a larger Conservative majority being elected, however given the fact that May’s government has now been weakened ahead of Brexit talks that will begin in the next 10 days, the currency’s future strength is in limbo.

Levels To Watch

Any meaningful (and sustainable) strength would first need to see the 1.3000 level regained, followed by 1.4000. Otherwise, I think the price will continue to bounce between 1.2000 and 1.3000 for the foreseeable future. A drop and hold below 1.2000 could precipitate a catastrophic plunge.

GBP/USD

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