Pound Levels to Watch When the U.K. Vote Results Hit the Wires

(Bloomberg) --

The pound may be in for a dramatic night as the world watches the results from the U.K. general election, with key market gauges suggesting there are sharp moves ahead.

With sterling trading near a near nine-month high and options indicators at levels unseen in years, here is a guide to the levels to watch when markets assess the exit polls at 10 p.m. in London and the first results of the vote, expected between 11 p.m. and midnight.

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Bullish Outcome

• The first key technical resistance for the pound comes around $1.3380-90, where the year-to-date high and an Elliott Wave 5 projection coincide
• First, pivot resistance at $1.3278 may absorb some buying pressure; a crucial level to watch out for is $1.3453, which represents the key 61.8% Fibonacci retracement of sterling’s losses since April 2018
• Also in play could be the 55-monthly moving average, now at $1.3412

Bearish Outcome

• Investors short the pound may be looking to trim their exposure only after the upper end of the symmetrical triangle that kept the currency confined before Dec. 3 is breached; this is currently seen at $1.2964
• Strong support should be met around or within $1.2756-$1.2806, an area that includes the 55-daily and 55-weekly moving averages as well as the low on Nov. 8
• Support from a three-month trend channel comes at $1.2627 while the Sept. 20 high -- also a breakout point -- is seen at $1.2582

Range-Bound Outcome

• In case the pound fails to sustain a big move in either direction, short-term levels to watch for include $1.3013, the Oct. 21 high; $1.2993, the 21-daily moving average; $1.3232-37, Upper Bollinger Band and pivot resistance
• NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

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