Pound Sterling (GBP) is up a notable 0.6% vs. the US Dollar (USD), extending Monday’s impressive gains and pushing back toward its recent multi-year high from mid-June, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP ignores softer CBI sentiment, threatens fresh multi-year highs

"CBI business sentiment figures were slightly softer than expected, however the market appears to be ignoring the data and setting its sights on the outlook for relative central bank policy. Yield spreads are providing GBPUSD with a fundamental lift, largely reflecting renewed dovish expectations for the Fed.

"This week’s release calendar is light, leaving the focus squarely centered on central bank expectations and the relatively heavy BoE speaking schedule. The last two sessions have provided GBPUSD with a meaningful recovery and a push back toward its recent multi-year highs from mid-June."

"The 50 day MA (1.3412) has once again been confirmed as an important level of medium-term support, and we look to near-term support in the 1.1520-1.1550 area. We see little additional longer-term resistance ahead of 1.3750."