The British pound jumped significantly higher in yesterday’s trading session and is trying to continue that trend today on the back of a deal reached between the Conservative party and the DUP party to form a new government in the UK.
The currency is now around a critical resistance level against the US dollar at $1.2815 (formerly a support level) and it has managed to break through this level in the Asian session and we believe it may struggle to remain above there and a pullback is immanent.
Overall we expect the pound to trade within a tight trading range over the next week or so and depending on the outcome of the political agreement, it could try to make a break for the $1.30 mark as it did a few weeks ago.
There is a good support level at $127.40 so at the moment there isn’t a huge amount of risk for long trading positions
To sum up, expect the British currency to trade sideways for quite some time before continuing its uptrend once all the political dust has settled.