British Pound Starts the Week on a Bullish Tone

After two weeks of falling, gbp/usd started the week on a positive note. On Sunday open it gaped down, but quickly came up and did not break lower anymore. It moved towards the low during European session, but formed a bullish w pattern on 15 minute chart and is rising now. You may see that intra day resistance is at 1.5273 level (Friday high). Intra day support starts at an even number of 1.5200 with key support being at 1.5160 (Sunday open low). 

There is no key fundamental data today or tomorrow that might impact exchange rate of the pair. On Wednesday GBP Industrial production is to be released at 08:30 GMT. Even more important data is coming on Thursday at 11:00 GMT. Bank of England interest rate decision is scheduled at that time. I have a hunch that US dollar bullish trend might be over for now and British Pound will strengthen from now on. On Friday inflation numbers from UK will also be carefully watched by market participants. Later in the day traders will also get USD U. of Michigan Confidence data, which should not have big influence on the pair.

gbp/usd pair opens with false breaks

Sunday opening in gbp/usd pair was marked by two false breaks. The pair initially gapped down, then recovered and made a false push upwards over its Friday resistance point. Gaps are the norm on Sundays; therefore it is advisable not to have open positions in any pairs over the weekend.

I do expect Pound to stay volatile this week and 1.5700 resistance level to be attacked. However, it is smart to wait for European session to begin on Monday and find better areas for entering long or short positions.

Support is around 1.5570 and resistance any number above 1.5660. 

The pair is slightly biased to move upwards. A convincing move below 1.5400 level would negate the bias. If broken upwards the next level of resistance lies around 1.5770 level, followed by 1.5900. If this area is broken we will see 1.6000 even number under siege sooner rather than later.

Market participants have expected rate hikes from BOE, but it seems to me we may expect FED to start hiking earlier than the Bank of England. If that is the case, US dollar might start gaining strength against British Pound at 1.6000 and the low of 1.4564 will come into play. This has yet to be seen. 

gbp/usd 15 minute chart