Cable Rallies Over 200 Pips Amid Brexit Rumors

The Great Britain Pound (GBP) rallied more than 200 pips against the US Dollar (USD) yesterday, increasing the price of GBPUSD to more than 1.4250 amid Brexit rumors. The technical bias has turned bullish because of a Higher Low in the recent wave on a daily chart. The trend will continue to be bullish unless the yesterday’s bullish pin bar is invalidated.

Technical Analysis

As of this writing, the pair is being traded near 1.4255. A hurdle may be noted around 1.4332, a major horizontal support turned resistance ahead of 1.4502, another horizontal resistance and then 1.4739, the swing high of the latest major upside rally as demonstrated in the following daily chart.

On the downside, the pair is likely to find a support around 1.4012, the intraday low of yesterday ahead of 1.4000, the confluence of a psychological number as well as the swing low of the latest major downside move. The technical bias will remain bullish as long as the 1.4012 support area is intact.

Brexit Rumors

The pound rally started as the news circulated that the U.K. Member of Parliament Jo Cox was killed after being shot at least twice following a meeting with her constituents. According to some sources, Cox, who is a member of the Labour Party, was a strong campaigner for the “remain” side for the June 23 referendum on whether or not the U.K should remain a member of the European Union. Campaigning for both sides of the referendum halted political activities for the day as a result of the tragic death.

Trade Idea

Considering the overall technical and fundamental outlook, buying the pair in short term may be a good strategy.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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