GBP/USD trades up to 1.3774, its highest since 17 September

GBP/USD D1 19-10

The pair is largely capitalising on the dollar's recent weakness as it extends gains after a bit of a breather yesterday. The push higher today has already erased the declines to start the week as price climbs to its highest in over four weeks now.

The near-term chart shows no immediate threat to buyers with the key hourly moving averages seen at 1.3698 and 1.3653 respectively.

As such, buyers are keeping near-term control and eyeing the 100-day moving average (red line) @ 1.3806 as the next key target currently.

That will be a key test for buyers' resolve in trying to gather more upside momentum and beyond that, the 200-day moving average (blue line) @ 1.3843 will provide additional resistance for any further upside push.

As much as the dollar looks sluggish, it is hard to see it tumble much further unless Treasury yields somehow turn much lower - which remains unlikely.

In terms of monetary policy, the market is aggressively pricing in a BOE rate hike for November but I'd argue it is going to be a buy the rumour, sell the fact play if it does materialise. And if it doesn't, the pound will get hit either way.

At this point, there is scope for cable to extend gains to test the key technical levels pointed out above but any sizable move towards 1.4000 and breaking that seems to be one step too far in my view.