The British pound has sold off over 10% since Brexit concerns surfaced in December, but since making a key low at 1.3835 on February 29th, price has rebounded over 700 pips. The latest ICM Brexit polled showed the leaving the EU camp took a small lead with 46% of the vote, compared to 44% who preferred to stay in the EU. The latest ORB poll went the other way and the staying in the EU received 51% of the vote, while the leave camp obtained 43%. The UK referendum is scheduled on June 23rd.
Price action on the GBP/USD daily chart shows that today’s high accelerated beyond the 100-day SMA. If we see further strength, price may target the 1.4710 level. It is around that area that price may form a bearish butterfly pattern. Point D is targeted with the 141.4 Fibonacci expansion level of both the X to A leg and the B to C move. If valid, we could see a major reversal back towards the 100-day SMA. If invalidated, price may find critical resistance from the psychological 1.50 handle.
The trade: Sell GBP/USD at 1.4710 with a stop loss at 1.4810 and a take profit at 1.4410. The Risk/Reward Ratio is 1:3