GBPUSD Surges as Conservative Party Closes In On UK Election Majority

The British Pound is surging in the Asian session on Friday as the Conservative Party looks set to storm to a UK election majority. The GBPUSD has spiked to 18-Month highs, briefly taking out the 1.3500 price level as collated results show the Conservative Party is in a strong lead with 495 out of 650 seats decided as at the time of writing.

The Conservative Party needs to clinch at least 326 seats to win an outright majority, and with 495 seats decided, the seat count is as follows as sourced from PA Media via dpa-infocom:

Votes
Party and leader Seats Share Count
Conservative Party

Boris Johnson

 

260 42.5% 10,260,809
Labour Party

Jeremy Corbyn

 

174 33.7% 8,139,816
Scottish National Party

Nicola Sturgeon

 

41 4% 973,536
Liberal Democrats

Jo Swinson

 

7 10.8% 2,603,082
Democratic Unionist Party

Arlene Foster

 

5 0.7% 172,181
Sinn Féin

Mary Lou McDonald

 

5 0.5% 120,559
Plaid Cymru

Adam Price

 

4 0.6% 147,948
Green Party

Jonathan Bartley & Siân Berry Am

 

1 2.8% 671,727
Brexit Party

Nigel Farage

 

0 2.3% 562,411
UK Independence Party

Patricia Mountain

 

0 0.1% 16,066
Other parties 3 2% 488,946

Final vote counts are expected to be out today, but UK PM Boris Johnson has retained his seat with an increase in his nominal vote from 23,716 in 2017 to 25,351 in the current election. Here are except of his statements as he secured his win was confirmed:

“It does look like this conservative govt has a powerful, new mandate…a mandate to get Brexit done”, he said, concluding by saying “our work will begin today”.

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Technical Outlook for GBPUSD

The GBPUSD has taken out most of the upside targets that I identified in my last analysis piece on the pair, with price just a few pips short of 1.3500, a price level not seen since May 2018.

With this price surge, new upside targets have emerged. If the final results reveal a Conservative Party majority, the GBPUSD could definitively take out the 1.3471 immediate resistance. A 3% penetrative close above this price level by the daily candle is needed to confirm this price break. This then opens the door for price to march on towards the 1.3611 level (previous highs of September 15 2017, January 1 2018 and May 5 2018). There is also the possibility of price rising even to the 1.3791 price level (neckline of previous double top of Jan and April 2018), if bullish momentum persists.

On the flip side, if the Conservative Party fails to secure a majority, this may encourage some profit taking by GBP bulls and price may falter at any one of these upside targets. This could then open the door for a retest of the immediate support levels below the current price targets. For instance, failure to break 1.3471 could cause GBPUSD to re-target the 1.3319 price area, where previous lows of December 2017 as well as previous highs of Feb 28 and Mar 13 2019 were found.

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