GBPUSD catches a bid as PM Johnson resigns
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Sterling appreciated in morning trade in anticipation of PM Johnson officially announcing his resignation; most likely before noon local time. The 15m GBPUSD chart shows a higher trough as its momentum oscillator turns up (red dashed vertical). We now look to see if this has laid a platform for the next higher peak in this time frame. His resignation means a 4th leader within six years for the UK, once the politics have run their course.
This week has seen over 50 tory resignations since Tuesday in protest of Johnson's less than satisfactory handling of the Chris Pincher scandal. This outrage was the last straw in a tenure marred by controversies, culminating with the newly appointed Chancellor Nadhim Zahawi telling in a letter on social media that the PM should resign.
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The current political crisis has added volatility to GBPUSD. However, we urge caution. The longer-term trend is down, with the weekly chart showing lower peaks followed by lower troughs. Moreover, the longer-term momentum is firmly down (green rectangle). Given this, any rallies may be targets for short-sellers.
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
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