close icon

GBPUSD Before and After the UK General Election

It is a bad day for Theresa May and GBPUSD bulls

The first exit polls of Britain’s General Election show that despite their win, the Tories are losing their majority in the UK parliament. This is thought to be the worst possible outcome, because Theresa May will either have to form a minority government or resign. As a result, GBPUSD, which climbed to as high as 1.2977 yesterday, plunged to as low as 1.2635 so far today.

Two questions arise from here: first, could GBPUSD’s selloff be anticipated and, if yes, how? Before the Election, the polls predicted the Tories are going to strengthen their position. Well, the exact opposite happened. So, obviously, relying on preliminary research is not the way to stay ahead of the Forex market.

However, we still insist the Pound’s deep dive did not came out of the blue. GBPUSD is no longer among our premium instruments, but some of our clients, whose subscriptions are still valid, received the following chart before the market opened on Monday, June 5th.(some marks have been removed for this article)
gbpusd elliott wave chart
As visible, five days before the exit polls came out, while GBPUSD was hovering around 1.2880, the Elliott Wave Principle suggested the pair might add a few more pips, but as long as the invalidation level at 1.3048 remained intact, “selling the rallies should lead to good results.” We thought so, because the rate entire development since the 1.1739 bottom of the “Flash-crash” in October, 2016, looked like a W-X-Y correction of the larger downtrend, which has been in progress since mid-2014. Therefore, once the correction was over at 1.3047, the downtrend was supposed to resume. Whether it was because the Election results or not, five days after that forecast, the price chart of GBPUSD looks like this:
gbpusd elliott wave chart after election
The pair’s rally to 1.2977 was followed by a swift and sharp decline of over 330 pips. Clouds are growing darker over Britain’s political class, which has yet to deal with the consequences of the last time they asked the people to express their opinion on a given subject. On the other hand, Elliott Wave analysts did not have to wait for the exit polls, since the market had already set the stage for the upcoming disappointment.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

You may also like:

Trade War Fears Shrugged Off by USDJPY

Less than a month ago, USDJPY was trading below 105.00 after plunging to 104.64. The media hurried to explain the dollar’s weakness against the Japanese yen with the looming trade war between the United States and China. Today, a trade war between the two largest economies is a near certainty, after China threatened to fight…

Read More »

USDCAD Selloff: Non-Farm Payrolls Just an Excuse

The last time we wrote about USDCAD, it was hovering around 1.29, after a decline from 1.3125. In a video, published on March 28th, we demonstrated how Elliott Wave traders got ahead of the bearish reversal that occurred a week earlier. Two weeks later now, the bulls are yet to find a way to fight…

Read More »

EURCHF Vulnerable to Bearish Attacks

EURCHF fell to 1.1447 on February 8th, but has been steadily recovering ever since. By March 28th, the pair was already testing the resistance near 1.1800, but could not breach it from the first try and fell to 1.1732 earlier today. Should we expect the next attempt soon, or maybe the bulls would need more…

Read More »

USDCAD Bears Land a Heavy, but Predictable Punch

1.2900 has been a tough nut to crack for USDCAD bulls. First, they failed to breach it in late-October 2017. Then they tried again a month later, but the attempt was once again unsuccessful. The third try was in mid-December 2017, but after a swift touch of 1.2921, the pair plunged to as low as…

Read More »

Trade War Not to Blame for USDJPY’s Plunge

USDJPY bulls looked like they were up to something, when the pair climbed to 106.61 on Tuesday. Three days later today, the pair is currently hovering at 104.90 after a 200-pip plunge to 104.64. Conventional wisdom suggests traders should look no further than the looming US-China trade war to explain the Japanese yen’s strength against…

Read More »

USDHUF Close to Major Elliott Wave Support

Surprisingly or not, the U.S. dollar has been losing ground not only to its major rivals like the Euro and the Japanese yen, but against the Hungarian Forint, as well. USDHUF reached 302.22 on December 15th, 2016. A year later, it was hovering near 260.00 and before the end of January 2018, the pair fell…

Read More »

Canadian Dollar Weakness Anticipated by Elliott Wave

Canadian dollar bulls had another week to forget, after the USDCAD rate surged from a low of 1.2615 on Monday to nearly 1.2900 so far. There have been two fundamental factors that applied pressure on the Loonie – the decline in crude oil prices and Donald Trump’s intention to impose import tariffs of 10% on…

Read More »

More analyses