Cable's close above 1.5595 last week was technically significant as that level represents the 50% retracement of the 2013 absolute range (H: 1.6380, L: 1.4812). Sterling found an early bid this week at 1.5608 and now eyes the 1.5781 area as the next upside target followed by 1.6010.
GBP/USD is caught in some technical crosshairs, however, as current price levels represent a re-test of the 38.2% retracement of the absolute range from the 2009 Low of 1.3501 to the High of 1.7042. A break above current levels will have longer-term technicians focusing on the 1.6206 area. Similarly, the move above 1.5308 was important because that area represents a 23.6% retracement of the 2008 peak (H: 2.1159) to the 2009 trough (L: 1.3501).
The 1.5839 level is a small jump from current market levels and longer-term chartists will recognize the fact that it is the 50% retracement of the post-Plaza Accord range with the 1985 Low of 1.0520 to the 2011 High of 2.1159. (see chart below)
Over the previous four years, cable has not deviated much above the 38.2% retracement (1.6601) or below the 23.6% retracement (1.4277) of the post-Gold Standard range (H: 2.6440, L: 1.0520).