The Pound Sterling (GBP) is up an impressive 0.5% vs. the US Dollar (USD) and outperforming all of the G10 currencies with the exception of New Zealand Dollar (NZD) and Swiss Franc (CHF), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP/USD eyes 1.35 with potential extension to 1.3789

"The bounce appears to be completely sentiment-driven in the absence of any major domestic data releases. There have been no speeches or public communications from the BoE however we note that several speeches are scheduled over the next couple of days, including one from BoE Gov. Bailey."

"The recent narrowing of UK-US spreads appears to have paused, for now. We anticipate a return to fundamentally driven movement as we look to this week’s trade and industrial production figures scheduled for Thursday."

"The GBP’s latest bounce is important and highlights clear support at the 200 day MA (1.3396). Momentum is neutral, with the RSI hovering just above the 50 threshold. The near-term balance of risk appears to favor further gains toward 1.35 with the possibility of an extension towards the July 1 high at 1.3789. We look to a near-term range bound between 1.34 and 1.35."