GBP Price Outlook: Downtrend Still in Place After European Elections
GBP price, news and analysis:
- The European Parliament elections in the UK provided no clear signal on the country’s future in the EU.
- That leaves GBPUSD in the downtrend that began in early May despite its recent relative stability.
GBPUSD price: stability may not last long
The European Parliament elections in the UK have had little impact on GBPUSD so far, with the currency largely stable at the start of the first full day’s trading in London after Sunday’s election results. The results can be interpreted in several ways but essentially they showed the country remains split down the middle on Brexit, with parties in favor and those against garnering roughly the same number of votes.
That means the downtrend in GBP in place since the start of this month remains in place, suggesting further losses ahead.
GBPUSD Price Chart, Two-Hour Timeframe (May 2 – May 28, 2019)
Chart by IG (You can click on it for a larger image)
The key to Sterling’s future is who will become Conservative Party leader, and therefore Prime Minister, after Theresa May’s decision to quit. If a Brexit hardliner such as Boris Johnson, the former Foreign Secretary and current favorite to become the next PM, wins then GBP will likely fall further – although that may be already priced in to the pair.
If someone less committed to a hard Brexit such as Philip Hammond, the Chancellor of the Exchequer, becomes the next leader that would likely help the British Pound – but for now that looks considerably less likely.
In the meantime, the key to the future of GBP remains whether it can hold above the 1.26 mark. After it bounced from just above that level last Thursday, any drop below could send the pair down to its 2019 low at 1.2435 touched on January 2.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.