The Pound Sterling (GBP) is up 0.3% against the US Dollar (USD) and outperforming most of the G10 currencies as we enter Tuesday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP reflects relief over politics into fall budget

"There were no overnight releases, and no BoE speaking engagements, offering little in terms of fundamental catalysts. BoE MPC member Breeden is scheduled to speak at 11:15am on the topic of technology and is unlikely to discuss the policy outlook. Sentiment is clearly dominating, as we note the material turn in risk reversals revealing a sharp decline in the pricing of protection against downside risk in GBP."

"Markets are clearly breathing a sigh of relief over PM Starmer’s recent cabinet shuffle and expressing confidence, or at least less concern, heading into the fall and the upcoming Autumn Statement (budget) scheduled for November 26. The GBP’s latest run of gains have been notable, breaking descending resistance drawn from the highs since July 1."

"The RSI is bullish and climbing and suggestive of accelerating momentum. The GBP is closing in on the mid-August highs around 1.36 and appears poised to push toward the 1.3789 multi-year high from July 1. We look to a near-term range bound between 1.3520 and 1.3620."