Sterling trades like no other currency, as we have once again been reminded in the last 6 months, and the impulsive nature of the moves overnight suggests to me that the market is seriously short and there are more spectacular gains ahead.
I prefer to play against the crosses but I would not be surprised to see cable challenging 1.6000 in the coming weeks. The 38.2% retracement of the 2.0160/1.3465 collapse comes in at 1.6025 and that looks like an achievable target once the pound gets wound up.
I am happy to buy cable or sell EUR/GBP at current levels and I will trade with tight stops until such time as I can catch a run in either. My feeling is that I may get stopped out a few times for 40/50 pips but when I jag a big move, I’ll make 800/900 fairly swiftly.