GBP/USD Turns Volatile, Drops to 1.4568 and Returns to 1.4600 Handle

GBP/USD Turns Volatile, Drops to 1.4568 and Returns to 1.4600 Handle

31 May 2016, 10:54
Roberto Jacobs
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GBP/USD Turns Volatile, Drops to 1.4568 and Returns to 1.4600 Handle

The GBP/SUD pair erased all of the latest 'Brexit' poll result gains to 1.4724 and dropped sharply below 1.4600 handle to 1.4568 and is currently trading off session low at 1.4600.

Earlier on Tuesday, the GBP/USD pair spiked after the latest ORB poll on the EU referendum vote on June 23 revealed a lead for respondents favoring to remain in the EU. According to the poll results, support for 'Remain' camp reached 51% while 'Leave' count reached 46%. 

The pair, however, reversed sharply from higher level and accelerated the downward momentum on possibilities of stops getting triggered below 1.4600 handle.

The pair also seems to take cues from a sharp reversal witnessed in the EUR/GBP cross that continues to attract fresh bids around near 3-month lows support near 0.7270-65 region. Traders now await for the release of the flash version of Euro-zone CPI, which would affect sentiment surrounding the EUR/GBP cross and eventually trigger additional volatility in the GBP/USD major.

From a technical perspective, repeated failures to sustain its strength above 1.4700-20 strong resistance and a subsequent drop below Monday's low now seems to have opened room for a near-term corrective move.

Technical levels to watch

On a sustained trade below 1.4600-1.4580 support now seems to extend the near-term corrective move towards a short-term ascending trend-channel support, currently near 1.4480-75 area with intermediate support near 1.4535-30 area.

Meanwhile on the upside, the pair needs to build on to its momentum above 1.4635-40 resistance in order to make a fresh attempt capture 1.4700 handle decisively.


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