After outperforming yesterday, the pound made a modest retreat in the market on Wednesday. It preserved key technical levels that broke during Tuesday’s rally that followed PM May’s announcement of general elections. The UK Parliament approved the call, so there are no obstacles to the June election. The Conservative party is looking to strengthen its majority and the support to Theresa May, in order to carry the Brexit process with more political power. On the economic front, the next report in the UK, will be on Friday (retail sales). On Thursday, Bank of England governor, Mark Carney will deliver a speech.
The GBP/USD pair continues to hold a strong bullish tone in the short-term, despite Wednesday retreat. It pulled back after a sharp rally allowing technical indicators to start moving away from extreme levels. The correction or the consolidation could continue during the Asian hours. The 1.2740 area looks to be a zone that should limit the correction and offer from there, a rebound. Only a move under 1.2590, not seen likely, would change the short-term bias. To the upside, a consolidation above 1.2850/60, would add support for a break above 1.2900.
Support levels: 1.2745 1.2680 1.2620
Resistance levels: 1.2810 1.2860 1.2940