The Pound in recent times has been very lacklustre for traders and shown little volatility, but the recent election result surprised many and showed that the UK is most certainly in for further uncertainty in the near future. I won’t speculate on the outcome of the UK as a result of the recent election, other than to say I doubt this is going to be a government with much control and the EU may look to apply pressure and turn it off depending on what it deems necessary for the Euro-zone. What will be damaging though is the consumer confidence and business confidence figures that are expected out in the next few months, many pundits are predicting the economy will suffer for this shock. I am also expecting that the Bank of England will not even look at shifting interest rates anytime in the near future now, given that everything is so up in the air. Traders however will be watching this one closely and the volatility is key to any traders strategy.

The big drops in the GBPUSD caused a field day for bears in the market looking to take a quick swipe and only recently have we seen the market look to shift upwards and gain back some ground. It’s not all bad news for the economy, and it looks to be that the 100 day moving average in this case is acting as dynamic support and preventing further movements lower. Below this we have two strong support levels at 1.2596 and 1.2496; the 1.2496 level I believe is likely to be very tough to crack as you have the previous bearish trend line which the market will look to respect in the event it moves further lower. This could be the point where we see some trading exhaustion. If the market decided to let the bulls take control and we get some positive news then 1.2743 and 1.2861 are strong levels, but any bullish movement will need to close and sustain above 1.2743 for it to be taken seriously. Previous attempts at this level have struggled, as we saw the other day.

Gold has been looking a little more bearish of late, as traders who were previously hedged look to unwind in the precious metal now that some of the storm has passed. Certainly some of the global fears have calmed down and the Euro-zone and the US are looking a little more stable, even if the UK is not.

Traders looking at gold will be focused on the recent push back through the trend line. There was very little support on the bearish trend line and it was able to push through very convincingly. So it may be the case that we are seeing a return to more normal levels in gold prices. Support levels can be found at 1256.35 and 1227.01, and these seem likely targets after the recent double top pattern we have seen from gold markets.