The British pound has been on an upward trend since last week with some US policymakers sounding less prepared for a sooner rate hike, while the market is bracing for the Bank of England minutes and the UK Q3 GDP data.
The GBP/USD has risen to an eleven-day high of 1.6186, moving off an eleven-month low of 1.5875 touched on 15 October.
The pound, however, pared some of its gains later in the day and touched as low as 1.6144 as data showed the government debt increased in September.
The UK's public sector net borrowing expanded to £12.600bn in September from £10.883bn in August while analysts were expecting a drop to £9.200bn.
If the pair manages to end this week higher, it will be a three-week streak of gains, the first since June.
St Louis Fed President James Bullard told Bloomberg TV that the US central bank could consider putting off its plans to end the quantitative easing programme, which is slated to end this month.
The BoE MPC minutes, due on Wednesday, can move the market if the voting differs from the 7-no change and 2-hike the rate pattern that was seen in the past two meetings, analysts say.
However, the attention will soon shift to the UK gross domestic product data scheduled for 24 October.
The consensus is for the UK economy to grow 3% in the third quarter, slower than the Q2 performance of 3.2%. Month-on-month, the growth is expected to slow to 0.7% from 0.9% in the previous quarter.
GBP/USD Technical Analysis
The fall in the pair from the multi-year high of 1.7192 since July has failed to break the 50% Fibonacci retracement of the one-year rally that ended in July this year.
The reversal now aims the 38.2% level at 1.6281 ahead of 1.6462 and then 1.6645, the 23.6% line. Further north, 1.6824 and 1.7000 are the two levels to watch ahead of the July peak of 1.7192.
On the downside, the pair has its first support at last week's low of 1.5875 and then comes 1.5752, the 61.8% level. The next downside points to watch out for are 1.5428 and 1.5233 ahead of the 2013 low of 1.4813.