GBP/USD stalls recovery from 7-week lows near 1.2780 support turned resistance

The GBP/USD pair staged a goodish recovery from lower levels and reversed almost 50% of the shocking UK election result-led slump to 7-week lows near 1.2635 region.

Although the ruling Conservative party lost their parliamentary majority, the Democratic Unionist Party has agreed to back the UK PM May to form a government. However, with no formal agreement or coalition, May might be forced to move away from her 'hard Brexit' stance over Brexit negotiations and helped the pair to recover from lows.

The recovery move, however, seems to have stalled near an important support break-point, now turned resistance, around 1.2770-80 region and the pair has now dropped back to 1.2740-35 region after UK PM Theresa May confirmed that Brexit negotiations would start in 10-days. 

Meanwhile, markets largely ignored today's mixed UK economic data (manufacturing and trade balance data), with political jitters acting as an exclusive driver of the pair's movement through European session on the last trading day of the week.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The pair bounced from the mentioned low and holds around 1.2730 where it also stabilized right after exit polls came out. The pair has an immediate resistance in the 1.2760/70 region, followed by 1.2800, although a recovery seems quite unlikely towards this last. Below 1.2705, the immediate support, the risk is back towards the downside, with 1.2660 and 1.2620 as the next intraday supports and probable bearish target."