The GBP/USD pair lost more than 50 pips in the last hour and refreshed its daily low at 1.3226 as the greenback started to gather strength against its peers. As of writing, the pair was trading at 1.3244, losing 0.33% on the day.
The pair came under a modest pressure after a report by The Financial Times claimed that the UK PM Theresa May was not going to increase her 20 billion GBP Brexit offer at this week's EU council meeting. “There will probably have to be a crisis in November,” a senior British official told The Financial Times.
On the other hand, the greenback gained traction as recent headlines of Stanford University economist John Taylor becoming a top candidate to take over the Federal Reserve following his meeting with Donald Trump were assessed as a USD-positive development. "U.S. central bankers are gradually removing economic stimulus under Yellen, a strategy Taylor has said he agrees with. The Fed policy rate is now set at 1 percent to 1.25 percent. How high it should go to achieve a neutral level -- a rate that neither stimulates nor crimps the economy -- is a matter of debate among economists, including Taylor." Bloomberg pointed out. At the moment, the US Dollar Index is at 93.18, up 0.3% on the day.
On Tuesday, the economic docket from the United Kingdom will feature the retail price index, PPI, and the CPI data. The consumer inflation is expected to advance to 3% on a yearly basis. A higher-than-expected inflation reading, which would ramp up the expectations of a BoE rate hike in as early as November, could help the GBP stage a robust recovery against the buck.
Technical outlook
The pair could face the initial support at 1.3190/1.3200 (50-DMA/psychological level) ahead of 1.3080 (100-DMA) and 1.3000 (psychological level). On the upside, resistances align at 1.3280 (20-DMA), 1.3340 (Oct. 13 high) and 1.3395/1.3400 (Oct. 2 high/psychological level).
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