A cautious GBP/USD short yielded over a 150 pips in profit last week but lack of conviction has led the pair to settle into a short-term range. We should see subdued volatility with the BoE rate decision ahead but I may look to get into a position following the upcoming manufacturing report. Signs that growth is sustaining could lead policy makers to turn their eye toward inflation, providing sterling support. However, an unexpected decline in activity may lead to additional QE from the MPC which would have a greater impact on price action. Therefore, I am leaning toward a bearish position based on the risk reward, as a break below 1.5325 exposes 1.5000. A declining trend line is providing resistance, but we can’t rule out a continuation of risk appetite on the back of the US labor report which could be a supportive factor for the pair.
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