GBP/USD Rallies on Cheaper Oil and Reduced Rate Hike Bets

The GBP/USD rose by 0.07% to $1.3330 on Monday, recovering for a second consecutive session from three-week lows reached on Thursday.

Despite a sharp drop in oil prices, which had been driving up energy costs and forcing the Bank of England's hand with rate hikes, sterling rose as investors scaled back their bets on further tightening ahead of the upcoming policy meeting on Thursday.

According to positioning data, speculators have covered shorts for four straight weeks, reducing net short sterling positions by $1.32 billion in a single reporting period.

The reduced bearish exposure means that each subsequent negative headline has less positioning to feed on, making the pound more resilient to downturns.