It was consolidation day 2 for the pound after Tuesday’s rally, following PM May’s announcement of general elections by June. It is still the currency of the week and it would end that way, unless it suffers a collapse on Friday. Mark Carney, BoE governor, said that he makes a distinction between the Brexit referendum and early elections. On Friday, the retail sales report is due in the UK, it would be the most important report of the week. In the US attention will be on the flash PMI.
The GBP/USD pair still holds a strong tone as suggested by the limited pullbacks. The pair rose modestly on Thursday holding below the previous day’s high but also remained above its lows. The area around 1.2770 is becoming a short-term support, below that area, the correction could extend to the 1.2740 zone, that should limit the downside, offering a rebound. Only a move under 1.2600, could change the short-term bias. To the upside, a break above 1.2860/70 would give an impulse to the pound to rise above 1.2900 toward 1.2940. The next strong barrier is seen at 1.3050.
Support levels: 1.2775 1.2745 1.2680
Resistance levels: 1.2840 1.2860 1.2940