GBP/USD inches closer to 1.31 as DXY plummets to mid-93s

The GBP/USD pair ran through fresh bids in the last hour and renewed weekly peak at 1.3082 before easing back a little. As of writing, the pair was trading at 1.3077, up 50 pip, or 0.38%, on the day.

This recent upsurge seems to be caused by a sudden greenback sell-off that pushed the US Dollar Index to its lowest level in 13 months at 93.51. Following the slump, the index is struggling to recover its losses and is now at 93.55, losing 0.3% on the day. Although there were no apparent triggers behind that move, investors remain reluctant to take any USD positions amid ongoing uncertainties surrounding the Trump's presidency. 

On the other hand, an improved market sentiment keeps the demand for currencies like the GBP high on Tuesday, providing an additional boost for the pair. If the solid performance of global stock indexes helps the Wall Street start the day higher, we could see the pair advance further in the NA session.

Today's data from the U.K., CBI Industrial Trends Survey, dropped to 10 in July from 16 in June and missed the market expectations of 11, but was largely ignored by the participants. Later in the session, Housing Price Index and Richmond Fed Manufacturing data, which are not seen as market movers, will be released from the U.S. Moreover, Andrew G Haldane, the Chief Economist at the Bank of England and Executive Director, will be giving a speech at 17:00 GMT.

Technical outlook

The RSI on the daily graph suggests that the pair could continue to advance before it becomes technically overbought. 1.3125 could be seen as the initial hurdle for the pair ahead of 1.3200 (psychological level) and 1.3250 (Sept. 16 high). On the downside, supports could be seen at 1.3000 (psychological level), 1.2975 (20-DMA) and 1.2875 (50-DMA).