The GBP/USD pair rose during the session on Thursday as the British pound continues its showing of strength against the US dollar. The pair had reached a trend line, and as such we saw the 1.61 level come in as support. The market is definitely favoring the Bank of England and its monetary policy, which of course is to simply sit still rather than the Federal Reserve's monetary policy wishes to print as many Dollars as possible.
The market continues to grind higher, and as such we found the 1.62 level again during the session. The candle close towards the very highs and it now looks like we will have an attempt to break out above that area again.
I believe firmly that this pair will continue much higher, based mainly upon the interest-rate differentials I will remain quite wide. I think that the British pound is one of the more attractive currencies at the moment as everybody else seems to be trying to devalue their own currencies, and as such the Pound should be one of the stronger major currencies for the next several months, if not years.
Bank of England
One of the most important things to pay attention to in this currency pair is what the stance of the Bank of England as. Right now, they are more than willing to sit still and therefore try not to expand quantitative easing or any other such monetary policies. However, if the language changes in the near-term, this could derail this rally.
Over the long term, I believe that the Federal Reserve easing its monetary stance is going to trump everything else in the markets. With this in mind, I do believe that the US dollar is going to continue to suffer, and this is especially true against this particular currency. Because of this, I am very bullish of this market and would not be surprised at all to buying this pair trading at 1.70 before the end of next year.
I see massive support at the 1.60 level, as well as the 1.58 level. Because of this, I will not sell until we clearly break through the 1.57 level, as it was the beginning of the resistance from the ascending triangle that sent us up this high in the first place.