I wouldn't chalk up much of this move to the pound, even if it is the best performing major currency today. It is all about the dollar at the moment as the softer greenback is paving the way for other major currencies to gain. As markets also carry over the mood from Friday, the more positive risk sentiment is also weighing on the dollar (and to some extent, giving the pound a lift as well; something something sterling behaving like a risk currency).
GBP/USD is now trading up to 1.1982 - its highest since 11 July - as buyers look towards retesting 1.2000 on the day:
I mentioned earlier that with there being little for markets to work with, this may be a more straightforward session where risk dominates. That appears to be the case now and while there is scope for the dollar to retrace as well, just be wary of key levels up ahead.
As highlighted earlier, the 1.0200 mark may be one to watch technically for EUR/USD and 1.2000 is also going to be a key psychological level for cable in that sense. I would argue that commodity currencies have more room to roam with AUD/USD potentially eyeing back a push towards 0.7000 and that might also give cable some scope for additional gains considering its recent behaviour.
To start off the new week, all the attention is on the dollar and risk sentiment and as long as trading sentiment continues to focus on that, we could see some of the early moves here extend a little more.
But as mentioned earlier, I'd still wager that this is merely a dollar retracement and that the bulls aren't done yet considering that the Fed hasn't wavered much in its resolve to hike rates towards the terminal region around 3.50% to 4.00%.
Once markets get past this whole 75 bps vs 100 bps debate, the focus on the above will most likely keep the dollar underpinned.