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.

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

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

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

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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