GBPUSD: All Eyes on UK Election Results
GBPUSD has broken below support at 1.5171, the bottom of a range that had contained the pair since early April, with prices now testing major psychological support at the 1.50 barrier. The UK general election is in focus as months of speculation end with voters finally heading to the polls. A series of televised debates between the candidates for Prime Minister produced a serious contender in the Liberal Democrat’s Nick Clegg, meaning that displacing the broadly disliked Gordon Brown and his Labour party will not necessarily secure a majority for the top-contender Conservatives and threatening to create the first “hung parliament” since 1974. This could prove to have dire outcome for British Pound, with investors fearful that a divided government will not have the conviction to meaningfully deal with the nation’s soaring budget deficit, a gap approaching 12 percent of GDP. Alternatively, an outright Tory victory could send the UK unit sharply higher. I will remain on the sidelines for now to see how the situation plays out from here. A break below 1.4970 would expose the 1.4803.
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