GBP/USD stalls at hourly support in a weak US dollar environment

• GBP/USD is holding in a consolidation zone in New York trade, little changed as investors await the BoE. 
• Traders await the next impetus and weigh Brexit risk and US fundamentals. 

GBP/USD is down some 0.15% on the day so far after travelling from a high of 1.3693 to a low of 1.3641. Sterling has been pressured at the start of the week and fell to the lowest level vs the greenback in over two weeks as investors weigh the Bank of England's policy stance vs. the ongoing spat between the UK and EU that has morphed into a disagreement with France over fish.

The latest on this front comes with the British Foreign Secretary Liz Truss who has said that Paris had “behaved unfairly” and made “completely unreasonable threats”, with the two sides at loggerheads over the number of licences the UK has handed French vessels keen to fish in its territorial waters.

BoE in focus

Meanwhile, the Bank of England is expected to hike by 15bp, but also to push back against some of the tightening bets through their inflation forecasts. Nevertheless, there are prospects for GBP weakness. Traders, in this regard, will be on the lookout for dialled down hawkishness in an overpopulated long position in speculative positions. Net positioning on the pound rose by 8.6% of open interest, reaching +10%, in the week ending 26 October which likely allows scope for some short-squeezing.

''GBP net longs positions jumped higher as speculation increased that the BoE could bring forward rate hikes,'' analysts at Rabobank explained. ''GBP had been slow to react to speculation about a possible 2021 BoE rate rise given fears of a policy mistake. Focus on the November 4 BoE policy meeting.'' 

Fed taper eyed

Across the pond, the US dollar has eased versus its main rivals on Monday flowing its biggest daily rise in more than four months in the previous session. The Federal Reserve is widely expected to announce a tapering of stimulus, a factor that has fueled the greenback's rise in recent weeks. The dollar index DXY, which measures the US currency against six rivals, was down 0.18% at 93.95 at the time of writing.