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The GBP/USD pair hasn’t done much over the last 48 hours. Tuesday ended up much like Wednesday, and that meant an unchanged market. The pair is currently sitting just under the 1.57 level which is the beginning of serious resistance all the way up to 1.58 or so. This makes sense, as the Bank of England has a meeting on Thursday that could see purchases of large amounts of assets by the central bank.
However, we cannot help but notice that the lows are getting higher over time in general, and this does suggest that perhaps this pair does want to continue higher. On a daily close above the 1.58 handle, we are willing to buy this market as it would show a serious shift in momentum as the pair runs towards the 1.60 and 1.62 levels. The bullish momentum from Friday has not abated, even though the market hasn't moved much since then. The fact that it hasn't been bothered to pullback is in fact a strong signal in and of itself.
With the central bank meeting coming up, and the nonfarm payroll number on Friday, it is possible that the rest of this week will be very slow for this pair. However, by the time we get done with this week we should be set up to see which direction that the cable pair once the move next. Because of this, we think that sitting tight but paying attention is probably going to be the best way to play this pair.
If we break above the 1.58 level, we would think that at least 200 pips should be in the trade. Alternately if we manage to close lower and break the bottom of the massive green candle from Friday, we think this pair will go down to the 1.5250 level again to test the lows. In general, we actually feel that the sell side of this market is probably the easier psychological position of the yen as the trend is so obviously bearish overall. However, we can only do with the charts tell us to do, and currently it does look like a lot of people were willing to buy the Pound.