Tuesday saw the Sterling rise for the second consecutive day as a softer dollar and optimistic Brexit expectations buoyed the pound. Rising 0.4% on the day the GBP/USD touched highs of 1.3193 as traders continued where they left off on Monday, unwinding short GBP/USD positions after last week’s selloff. The pound was also slightly stronger against its European counterpart with the EUR/GBP opening this morning Sydney time at 0.8927. It is worth noting that investors were still wary of bidding the sterling up above last week’s high of 1.3295 as the uncertain political situation, particularly prime minister May’s position, continue to weigh on the currency. The UK labor party conference has only served to highlight how divided the party is on Brexit.
Looking ahead today GBP/USD traders will be watching the FOMC monetary policy decision. Markets are expecting the FED to raise their benchmark interest rate, however, any surprises in the accompanying commentary from chairman Powell will inject some volatility into the market. Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.
On the technical front GBP/USD seems relatively well supported around 1.3082 with any upside moves likely to be met by resistance at the 1.3200 handle.