The Pound Sterling (GBP) is entering Tuesday’s NA session with a modest 0.1% gain, lagging its European currency peers while slightly outperforming growth-sensitive commodity peers CAD and AUD, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

UK-US spreads push higher

"The domestic calendar is heavy but releases are concentrated toward the end of the week, starting with CPI on Wednesday, and followed by public finance figures and preliminary PMI’s on Thursday. Domestic rate expectations are offering the pound critical support as markets fade their pricing of cuts. The 2Y UK-US spread is extending its push higher and recovering to levels last seen in early April."

"The multi-month trend remains bullish, confirmed by the early August pullback that reinforced support in the mid1.31s. Momentum is in bullish territory but only modestly so. The latest pullback has seen near-term support offered by the 50 day MA (1.3502). We look to a near-term range bound between 1.3480 support and 1.3580 resistance."