Nick Nasad
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GBP/USD - Strong Gap Open Implies Further Gains to Come

With Larry Summers out of the running for Fed chair, we had a strong reaction over the weekend, primarily in USD crosses as the probably candidate now is Janet Yellen, who is considered more dovish. 

  • There were gaps in most of the USD crosses, but the one that has cought my eye is the one in the GBP/USD.
  • The pair has been climbing over the last 2 weeks, pushing above important resistance at 1.5715 last week, and above 1.5830 on Friday.
  • Sunday's open saw the pair start above 1.59, and this increases the likelihood that we have further continuation in this pair.
  • The question is will we first have a retrace to close the gap first.
  • The targets to the upside include 1.5990, 1.6050, and 1.6170.
  • This would require a very anti-USD reaction to Wednesday's FOMC decision - the key risk event this week.
  • The bullish case is not invalidated until we have the pair trade below 1.5835, the old level of resistance turned to support from Friday's session.

- Nick