GBP/USD has rallied around 3.5% from Theresa May announced a snap general election until May 22, as markets have largely priced in the expectations on a Tory landslide victory.
GBP/USD hit a high of 1.3047 on May 18, last seen September 29.
However, the bullish momentum has waned since May 22, as the difference of approval rating between the Conservative and the Labour narrowed to 9% after Theresa May proposed cancellation of free school lunches and reduction of free healthcare services for wealthy elders.
The terror attack in Manchester and the downward revised UK Q1 GDP released on May 25 further weighed on Cable.
Notably, per the latest polls conducted by YouGov after the Manchester terror attack, the Conservatives’ lead is now down to just 5%, 43/38.
On Friday May 26, GBP/USD has plunged around 100 points, hitting a 3-week low of 1.2836.
On the 4-hourly chart, the 10 SMA has crossed over the 20 SMA downward, indicating increased bearish momentum.
The uncertainty over the general election outcome has been lifting, weighing on GBP prospect.
The downtrend will likely test the significant support line at 1.2800, where there is a stronger support.
However, if the support line is broken, we will likely see an extended downtrend.
Be aware that GBP crosses are likely to be volatile before and after the general election.
The resistance level is at 1.2850, followed by 1.2880 and 1.2900.
The support line is at 1.2830, followed by 1.2800.
US durable goods, core durable goods (Apr) and Q1 GDP second reading will be released at 13:30 BST this afternoon. It will likely affect GBP/USD.