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GBP/USD extending losses on UK political uncertainty

Pound/dollar already erased the election announcement gains, falling to the lowest levels in two months. We listed 3 reasons for the downfall. Different forces converged to hurt the currency pair.

And now, cable extends its downfall, and it is led by UK politics. Her Majesty The Queen will make her speech today, laying out the new government’s plan. However, the plan will be limited, as the government still does not have a majority.

Talks between PM Theresa May’s Conservative Party and the Northern Irish DUP have not been concluded. According to some UK news outlets, the small party wants more respect from the ruling Tories. Comments by backbenchers have resulted in insults. The DUP is also taking advantage of its position as a kingmaker party.

The two parties will likely forge a deal, but many analysts see a limited reign for May. Another round of elections is likely later this year.

GBP/USD slips

Pound/USD reached a new low of 1.2589, the lowest since the day May announced the elections on April 18th. Psychological support is at 1.25.

Further support is at 1.2350, followed by 1.2250. Resistance is at 1.2635, the low point before the most recent drop.

Here is how it looks on the daily chart:

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.