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Conservative Victory in UK Parliamentary Elections Pushes Pound to a Two-month Maximum

On Friday the British pound hit a maximum since 26th February this year. The pound was reacting to preliminary results of the UK parliamentary elections with a sharp growth. The current GBP/USD quote is 1.5441; the session peak is at 1.5520.

According to preliminary calculations, the Conservatives under the leadership of David Cameron will receive a parliamentary majority. Such strong support for the Conservatives has contributed to a rise in the price of the pound: Cameron’s policies have steered Britain out of the murky waters of the 2008-2009 financial crisis by reducing state spending. Investors know what to expect from the Conservatives. It’s worth mentioning that before the election, businesses weren’t confident of Cameron achieving a majority since Britain is percieved as needing a more progressive style of politics.

From a technical analysis perspective, after many stop orders had been set off and a maximum was reached, the pound/dollar dropped to around 1.5420 where it will close the week. There’s the probability that American evening reports on the labor market will affect the price of this instrument. Over the medium-term the pound/dollar will remain in the 1.51-1.545 zone.

Attention:

Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.

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