The Bank of England meets this week and there might be a policy shift, easing the recent bearish strains on sterling.
However, a rise in delta variant COVID infections, leading to a delay in easing social distancing restrictions, underlines the fact that the pandemic still has a hold on the UK and the pound.
Sterling is attempting to correct six days of losses versus the dollar and some in the market may see perceived value ahead of the BoE meeting.
A squeeze above the 1.3940 100-day moving average could trigger a stronger sterling reversal.
May's UK inflation surprise to the upside could justify a shift in BoE policy.
A pick up in five-year yields suggests the market might be positioning for a hawkish spin, leading to a yield topside break from established ranges.
Recent sterling weakness was rooted mainly in the unwinding of long positions as a surprisingly hawkish FOMC boosted the dollar nL5N2O0105, but was also linked to disappointing UK data and the delay in easing restrictions from June 21 to July 19. nL2N2NZ0ZSnS8N2LL05A
For more click on FXBUZ
GBP/USD daily candle chart: Click here