EUR/GBP Technical Analysis: GBP spikes on UK election exit polls, pair most oversold since 2015
- British Pound is cheering exit polls forecasting a landslide victory for PM Boris Johnson.
- EUR/GBP is looking most oversold since early 2015.
- Markets have likely priced in Johnson's victory.
EUR/GBP is currently trading at 0.83, having hit a low of 0.8276 an hour ago.
Currently, the pair is reporting 1.72% on the day, the biggest single-day decline since Jan.17, 2017.
The British Pound is solidly bid due to exit polls predicting a landslide victory for the UK Prime Minister Boris Johnson's Conservative party.
If the polls are correct, Johnson’s withdrawal agreement is certain to get through parliament by the current Brexit deadline of Jan. 31, said Bloomberg economist Dan Hanson.
Also, it would reduce the uncertainty that has hurt businesses since 2016.
Oversold
EUR/GBP 14-relative strength index is currently hovering at 23.95, the lowest level since early 2015. Put simply, the pair is most oversold in nearly five years.
An oversold RSI does not necessarily mean a bullish reversal, as indicators tend to stay oversold for a prolonged period in a market with strong bearish momentum.
That said, EUR/GBP's sharp drop from 0.90 to 0.83 seen over the last months indicates the market has likely priced in Johnson's victory.
So, a corrective bounce could be seen once the Conservative party victory is confirmed.
Daily chart
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Trend: Bearish but oversold
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
