GBP/USD: looking fragile ahead of US election results

Currently, GBP/USD is trading at 1.2400, down -0.01% on the day, having posted a daily high at 1.2442 and low at 1.2359.

GBP/USD is in a minor recovery, looking a little heavy within this November sell-off. The US elections will be taking the spot-light with just being hours away from the result. A Clinton victory could lead to a sell off in the greenback either way considering how much has been priced in already, with USD/JPY now through the 105 handle, ultimately supporting the upside in the pound, although a tight victory could also weaken the dollar. Sterling is a volatile pair and is very hard to call whoever wins, but a Trump victory is almost a certain negative for the greenback.

However, analysts at Nomura explained, that at some point, there may be some good news that leads to a GBP positioning squeeze higher (as the market is very short GBP). "Prior to the flash crash we would have said a considerable amount (3-4% perhaps), but now with many short positions in the exotic options space likely to have been cleared out perhaps it won’t be such a position squeeze," explained the analysts, adding, "Over the last few sessions we are inclined to say that GBP has been trading in a way that would imply that short-term positioning is a lot cleaner. So if there is any rally it should be shortlived and will be used by the market as an opportunity to sell at better levels unless of course it is due to a complete reversal of position from politicians on the current “Hard Brexit” stance."

GBP/USD levels

Current price is 1.2401, with resistance ahead at 1.2403 (Daily Open), 1.2407 (Weekly Classic PP), 1.2412 (Hourly 100 SMA), 1.2427 (Daily Classic PP) and 1.2442 (Daily High). Next support to the downside can be found at 1.2398 (Hourly 20 EMA), 1.2377 (Yesterday's Low), 1.2376 (Daily 20 SMA), 1.2359 (Daily Low) and 1.2353 (Daily Classic S1).