Key levels and outlook for pound based pairs before election - part 1

Focus now turns to UK election to be held tomorrow. Implied volatility has reached highest level since 2010 election hovering close 18% for a week.

Pound bulls are showing remarkable resilience against broad based expectation of pound going down.

Outlook and key levels are discussed below for pound based pairs -

GBP/USD - 1.522

• The pair remains range bound. Pair is showing strength against dollar bulls, partially driven by falling yield spread between dollar and pound. Non-farm payroll report on Friday is key for this pair.
  
  
• Technically speaking pound has made bearish inverted hammer with high at key resistance of 1.55. A break above would push the pair towards 1.595.

• Key support - 1.506-1.508, 1.492 -1.486

• Key resistance - 1.529-1.533, 1.55-1.555

EUR/GBP - 0.737

• Euro made solid gains against pound last week, however struggling to keep its head above 0.74 level so far this week.
  
• Diverging monetary policy is keeping the bias downside, however most potential of the pair is in playing contrary, should Euro break above decisively. We prefer upside for this pair with stop loss.
  
  
• Upside target potential stands at 0.775
  
• Key support - 0.731-0.727, 0.7084
  
• Key resistance - 0.738-0.742, 0.757-0.761

GBP/JPY - 182.2

• This pair has lot of potential to the downside, should the UK election succeed in generating massive risk aversion, that would prompt the pair to move in opposite direction or else all the potential of the pair would rest on pound's move.

• Major potential for this pair stands. Weaker pound and risk aversion might push the pair towards 176-177 area.

• Key support - 181.3 - 180.8, 179.3 -179, 175

• Key resistance - 182.7- 183.1, 185-186

GBP/CHF - 1.406

• This pair is in clear downtrend bias. However as of now it is trading close to psychological support of 1.40. It will best to add position on bounce back to key support area and breakout.

• Some bounce back potential exists even if it breaks 1.40 area, is trades are taken in breakout it would be best to average it out at key levels. Pair is suitable for longer term calls. It has potential to move towards 1.35 in short to medium term.

• Key support - 1.387-1.391, 1.348-1.344

• Key resistance - 1.424- 1.427, 1.467-1.47