After British Prime Minister Theresa May announced her resignation, the GBP/USD rallied to the 1.2747 level but did not get enough momentum to complete gains, as markets closed in both the US and the UK for official holidays and the pair retreated to 1.2673 at the time of writing and ahead of the announcement of US consumer confidence. The general trend of the pair will remain bearish as long as it remains below the 1.3000 level. Brexit’ developments will continue to be the most influential on the pair's price path.
The results of European parliamentary elections showed huge gains for extreme right-wing parties across Europe, and Britain's exit party, Brexit, was one of the biggest winners today, where the party won 29 seats, compared with 10 for the Labor Party and only 4 seats for the Conservatives. On that, Theresa May tweeted: "It was a very disappointing night for conservatives". The results of the elections were a resounding reaction against the first parties because of their handling of Britain's exit from the European Union, which was behind the original deadline, with no solution looming. For investors, the worst scenario is Britain's exit from the EU without a deal, which could undermine the economy and increase the pound's losses sharply. Attention is drawn to who will succeed May in managing the Brexit file professionally to prevent disasters to the United Kingdom.
US stocks closed lower last week, and on the economic data, US durable goods orders for April were lower than expected. Durable goods orders declined by 2.1%, slightly below -2.0%. This was the biggest drop since January 2018. Core durable goods orders slowed to 0.0%, down from 0.4% the previous month. The US economy performed well and the markets are looking forward this week to the release of the first quarter GDP figures, which are expected to achieve strong gains of 3.1%. The preliminary GDP reading showed a 3.2% rise, stronger than the 2.2% forecast. The US dollar will be strongly affected in response to the results of this important report.
The most important support for the GBP/USD today: 1.2645, 1.2580 and 1.2490, respectively.
The most important resistance levels for the GBP/USD today: 1.2735, 1.2820 and 1.2900 respectively.