(C) Reuters.

By Yasin Ebrahim

Investing.com – The pound held onto the bulk of its gains against the dollar on Monday, ahead of key data due later this week, with some investors suggesting further upside could be on the horizon should investors continue to favor risk.

“Over the last two weeks the GBP has been the best performing G10 currency. Unless there is a broader deterioration in overall investor risk sentiment, the GBP appears well placed to extend its advance in the near-term,” MUFG said in a note.

GBP/USD, or cable, climbed 0.23% to $1.3081, after climbing to a session high of $1.3104.

The latest move higher in the pound came ahead of key economic data including an update on the labor market and second-quarter GDP due later this week.

Cable, which is on a two-month winning streak, is nearing levels that if surpassed could set it on a course to test a more than eight-month high.

“If cable is able to break above the 1.3200 where the highs from earlier this year are located, it will open the door to a potential test of the December 2019 high at close to the 1.3500,” MUFG added.

The pound’s move higher has also been helped by data that net shorts – bets on a decline – on the currency has decreased.

Speculators’ net short position on the pound fell in the week to Aug. 4, weekly CFTC positioning data showed.

Sterling is unlikely to face a smooth path higher as there remain risks ahead including uncertainty on a post-Brexit deal and the prospect of virus-led hit to the economy.

The U.K. and EU are expected to continue post-Brexit trade talks throughout the autumn up until Oct. 2, which some EU lawmakers have earmarked as a potential date by which to conclude negotiations.