The British pound dropped below key support around the 1.2800 level against the US dollar on Friday after some negatively-perceived economic and political news emerged from the UK on Thursday. First, the UK’s Q1 GDP estimate released on Thursday morning was revised down to 0.2% against prior forecasts of 0.3%.

Even more damaging to the recently-strengthening pound, however, was the latest opinion polling for the upcoming June 8th UK elections that was released late on Thursday. The poll, conducted by YouGov/The Times, suggested that UK Prime Minister Theresa May’s Conservative Party is now leading by only 5 points ahead of its closest rival, the Labour Party, down from a 20-point lead less than two weeks ago. This sharp reduction in the Conservative lead weighed heavily on the pound, as it raised questions on whether May would be able to secure enough of a majority and mandate to fend off Brexit hardliners and deal with difficult Brexit negotiations in a smoother, less turbulent manner.

On the US side, the dollar found some footing on Thursday and Friday after having spent much of the past two weeks in a virtual state of free fall against a few other major currencies, most notably the euro and Swiss franc. This relative stabilization for the dollar was helped along on Friday by a better-than-expected US Q1 GDP reading, which showed an annualized 1.2% growth rate – higher than both the previous reading of 0.7% and the consensus forecast of 0.9%.

The pound’s sharp fall and dollar’s modest bounce on Friday resulted in a tentative GBP/USD breakdown below key 1.2800 support, as previously noted. This level also coincided with a clear uptrend support line extending back to the mid-March low. Additionally, directly below current price action is the support provided by the key 50-day moving average. With any further relief rally for the US dollar ahead of next week’s pivotal US jobs report and/or more pound jitters ahead of the early-June UK election, a follow-through breakdown below the noted support for GBP/USD could begin to target the next major support objective around the 1.2600 level.

Risk Warning Notice Foreign Exchange and CFD trading are high risk and not suitable for everyone. You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. Margin and leverage To open a leveraged CFD or forex trade you will need to deposit money with us as margin. Margin is typically a relatively small proportion of the overall contract value. For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses. Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD stays below 1.3350 on poor UK PMIs

GBP/USD hits fresh session lows of 1.3335 following an unexpected drop in the UK's Preliminary Manufacturing and Service PMI reports. However, the downside appears capped amid growing Brexit optimism. 

GBP/USD News

EUR/USD keeps range around 1.1130 on downbeat PMIs

EUR/USD trims gains to trade near 1.1130 region after the sentiment around the euro was dented by the disappointing German and Eurozone Preliminary Manufacturing PMIs. Trade concerns also keep the gains limited. 

EUR/USD News

The phantom of fear pierces crypto market foundations

Negative technical indicators are extremely volatile and are approaching a technical rebound. Ethereum has fundamentals in play versus Bitcoin which could be lethal. XRP is not immune to downfalls and adds to the dangerous game of critical supports.

Read more

Gold consolidates in a range, flat-lined around $1475 level

Gold extended its sideways consolidative price action through the early European session on Monday and remained confined in a narrow trading band near the $1475 region.

Gold News

USD/JPY: Holding on to higher ground but lacking momentum

Positive developments between the US and China keep the mood up. Japanese data mixed, industrial figures continue disappointing. USD/JPY needs to advance beyond 109.72, December monthly high.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures