GBP/USD advances toward 1.3780 amid USD pullback, hawkish BOE

• GBP/USD records fresh daily gains on Tuesday in the early European trading hours.
• Lower US Treasury yields undermine the demand for the US dollar.
• Sterling enjoys increasing bet of BOE rate hike expectation and Brexit optimism led gains.

 GBP/USD shrugs of the previous session’s dull performance and trades higher on Tuesday. The pair jumped nearly 50-pips after opening lower as the trading session began. At the time of writing, GBP/USD is trading at 1.3771, up 0.32% for the day.

The move is primarily sponsored by the selling pressure in the greenback. A number of factors assisted the recent pullback in the buck. A weaker US data along with global rate hike expectations weigh on the prospects of the US dollar. The US Industrial Production fell 1.3% in September due to supply-chain constraints and Hurricane Ida. The US benchmark 10-year bond yields retreat toward 1.57% as investors digested Fed’s tapering.

On the other hand, the British pound gained following the hawkish comments from the Bank of England (BOE) Governor Andrew Bailey. He was quoted as saying that the Bank of England (BOE) is set to raise interest rates as inflation risks arise. Nevertheless, BOE’s members Silvana Tenreyro and Catherine Mann retreated their view on inflation as “transitory”.

Meantime, UK’s Prime Minister Borris Johnson promised to fix a solution to Brexit’s Northern Ireland Protocol. This, in turn, uplift the British pound in recent trades.

As for now, traders keep their focus on the US Building Permits, Housing Starts to gauge market sentiment.

GBP/USD additional levels