The Pound recovers back above the 1.2600 mark as Prime Minister secured her leadership position after winning the critical vote of confidence voted by the Conservative party’s members of parliament. Confirmation that May will retain her position as Prime Minister lifted the Pound as this event removed uncertainty and doubt about the future political conditions within the UK and the future of the Brexit negotiations with the EU. Investors need to note that no positive developments relating to Brexit have occurred yet meaning that yesterday’s rally may be unsustainable. Moving forward, Brexit developments will continue to be the main driver of the pair. Today specifically, investors need to closely monitor any Brexit related news that may come out from the EU summit.
After bouncing off the 1.2467 support, the British Pound managed to break above the 13-period moving average signaling a potential shift in the short term momentum of the pair. The next leg up will be confirmed if prices manage to break above the 50-period moving average exposing the 1.2780 resistance level. Note that a break back below the 13-period moving average will drive prices back towards the 1.2467 support level.
Support: 1.2592 / 1.2467
Resistance: 1.2685 / 1.2780