The pound sterling was surprisingly resilient during Wednesday’s bought of risk aversion and now that the tables have turned, we have seen a remarkable run-up in the pair. Since bottoming 10 hours ago, it has shot up to 151.50 from 148.50 – a 300 pip move. About two-thirds of that came in the past two hours after the U.S. GDP report showed growth at 3.5% compared to the 3.2% expected. There is also talk of Middle Eastern buying.

The GBP crosses have all traced out more bullish technical patterns than the rest of the market, which is consolidating. On the hourly chart, we see that GBP/JPY has cracked resistance from the double top on Monday and Tuesday.

GBY/JPY hourly oct 28

We would caution that an overshoots happen and we would want to see an hourly close above 151.20 before we would be jumping in. If it does, there is no resistance all the way up to 153. On a failure, look for a quick pullback to 150 or 150.20.

Also be aware that the hourly Bollinger is far into overbought territory so bulls looking to get in will eventually get a chance.

Much of the volatility in GBP relates to uncertainly about what the Bank of England will do when policymakers meet next week. A Reuters poll of 62 economists shows 19 do not look for an further quantitative easing, 22 for an additional 25 billion pounds and 21 for an additional 50 billion pounds. The more easy money, the worse it will be for the sterling.

The Bank of England decision is Thursday, Nov. 5 at 5 a.m.