GBP/USD clings to gains above 1.3200

• Renewed softness around USD gives wings to Cable.
• Speculations on a rate hike by the BoE driving sentiment.
• GBP ignores sex scandal hovering over Parliament.

The Sterling is adding to yesterday’s strong gains and has pushed GBP/USD beyond the 1.3200 handle at the end of the trading session in Asia, flirting at the same time with fresh 3-day tops.

GBP/USD attention to BoE

Cable is prolonging the rebound from last week’s multi-day lows in the 1.3070 region, largely on the back of a renewed offered bias surrounding the greenback and rising expectations on a rate hike by the Bank of England at its meeting on Thursday.

In fact, recent auspicious results from UK GDP seem to have revived expectations of a move on rates by the BoE later in the week, although consensus over this potential scenario stays pretty divided for the time being.

In this regard, Senior FX Strategist at Rabobank Jane Foley noted “This sharp swing in expectations is almost entirely the result of the step up in hawkish rhetoric proffered by the MPC rather than a response to UK economic data… The implication is that for many forecasters, the expectations of a rate rise on November 2 is not necessarily consistent with what they think the Bank should do, but rather what the MPC now looks likely to do. To protect its credibility, we do now expect that the Bank will hike rates in November. However, due to weakness in recent economic data, we anticipate that the Bank will not be able to follow on with another move for some time”.

Nothing scheduled in the UK docket today, whereas the S&P/Case-Shiller index, Chicago PMI and CB’s consumer confidence for the month of October are all due later across the pond.

GBP/USD levels to consider

As of writing the pair is gaining 0.02% at 1.3211 and a breakout of 1.3262 (23.6% Fibo of the 2017 up move) would pave the way for a test of 1.3281 (high Oct.26) and finally 1.3338 (high Oct.13). On the other hand, the next support emerges at 1.3174 (55-day sma) seconded by 1.3072 (100-day sma) and then 1.3070 (low Oct.27).