The GBP/USD opened around 2.0540 after tracking higher during the US session when the market perceived Bernanke's testimony as being a bit more dovish than expected. The opening level at 2.0540 turned out to be the high for the Asian session as talk circulated that the 2.0550 option barrier was very large and was being defended by a large Asian player.
The GBP/USD eased a bit more after Anatole Kaletsky wrote in a UK Times article that despite the talk in the City, UK rates have probably peaked at 5.75%. The GBP/USD traded down to 2.0511 before decent buying emerged and it settled between 2.0515/30 for the balance of the session. The EUR/GBP opened at 0.6723 and pushed up to 0.6730 after the Kaletsky article before settling back around 0.6722/24.
Sentiment towards the GBP/USD remains bullish, but traders are a bit wary about taking on the option barrier at 2.0550 without fresh factors to do so. Daily techs are extremely overbought and warn that a period of corrective consolidation may be needed before the GBP/USD can move higher again. UK PSNB and Retail Sales are out later today.
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