GBP/USD

Interest Rate Optimism: Unanimously voting to keep rates at the current 4.50 percent level, central bankers made no mention of any further considerations of near term cuts in the benchmark.  Fueling bullish sterling sentiment, further pushes higher in the underlying currency were bolstered by continued mentions of rising energy prices and inflationary concerns as consumer price increases remain high on the year.  As a result, market players boosted the underlying with expectations now residing over a stable repo rate or even future hike considerations.  Confirming the aforementioned notion, implied rates on the short sterling contracts remains at 4.47 percent.

Beige Book Disappointment: In light of housing starts continuing to rise in favor of dollar bullishness, the overall beige book assessment by the Federal Reserve suggested that the recent momentum may in fact be waning in the world's largest economy.  The report suggested gradual dips in housing valuations in major metro areas of Boston and New York in addition to sliding consumer confidence and retail activity. Nonetheless, prices still rose on the evaluation as energy prices dissipate throughout the economy.  Ultimately, this looks to contribute to further speculation of rising interest rates.  However, with subsequent data, it may spark some concerns over the justification of such central bank policy.

Technically Speaking: Running on this morning's momentum, and a textbook double bottom, the current rise looks to be slightly overextended as we hover the 1.7650 level.  As a result, the most probable scenario looks to involve a retracement to the 23.6 percent fib where previous consolidation occurred.  And penetration would see a definitive 1.7574 test.  

GBP/JPY

Fundamental Anticipation: With no economic data, aside from the Bank of England minutes, traders are anticipating tomorrow's retail sales data for further suggestions of potential near term rate hikes.  Expected to rise 0.3 percent, an upside surprise may further the notion even as the committee loses a steadfast hawk, deputy governor Sir Andrew Large.  At this point, policy makers may be wanting the test the resiliency of the consumer on a hope that even in a rate hike scenario, the market will ultimately adjust. However, the concern still looms that further hikes will bolster price increases even more.

Economic Growth Potential: Recent data has been confirming earlier notions of a complete turnaround in the world's second largest economy as compared to last year's results.  Potentially furthering the current optimism looks to be the upcoming Tertiary Index report for tomorrow.  A reflection of the services sector spending, higher readings would suggest that the sector is back and revved up going into the end of the year.  However, any further downside surprises, such as the one seen in the previous period, may lend to further strength for Yen bears.

Carry Trade Push: With a more stabilized interest rate for the U.K. region, traders continued to bid the pound sterling higher.  With the zero rate policy currently maintained in the world's second largest economy, positions subject to the carry trade strategy are now reaping 450 basis points in light of rising fundamental factors in the Japanese economy.

Technically Speaking: Much like the cable major, the GBPJPY cross looks to be consolidating at the top of the bull wave of the previous three sessions.  A potential retracement, confirmation comes from the Stochastic oscillator displaying a death cross.  However, a peak below the reference would be needed for a definitive test of the 202.75 level.

GBP/CHF

Further Carry Trade Potential: Much like the GBPJPY cross, traders bid the GBPCHF cross higher as a carry trade opportunity exists with a 0.75-1 percent range on the Swiss interest rate.  Still reaping over 300 basis points, traders look to be potentially adding on an optimistic consensus of tomorrow's retail sales report.  With no economic data to sway Swiss traders further bidding for the sterling looks imminent as we enter the Asian session.

Technically Speaking: Although relatively choppy, the GBPCHF cross looks to be establishing an upside channel.  As a result, in connection with underlying major activity the recent bull wave looks ripe for a retracement as it tests the upper boundary.  As a result, the first downside test looks to reside at the 23.6 percent fib at 2.2766 with a penetration leading to a definitive test of the 2.2703 figure support.  Confirming any downside direction is the Stochastic oscillator offering potential death cross formation.  However, without a definitive formation in addition to a dip below the reference level, short sellers maybe reluctant at this point.

Richard Lee is a Currency Strategist at FXCM.