GBP/USD struggles to hold above 1.32 on greenback strength

The GBP/USD pair reached its daily high at 1.3220 during the European session and started to lose traction as the greenback continued to extend its recovery gains. As of writing, the pair was trading at 1.3185, losing 0.1% on the day.

Despite today's fluctuations, the pair is struggling to find direction and remains in a relatively tight 50-pip trading range. On the one hand, the improved risk sentiment and some positive developments over the Brexit negotiations help the GBP stay resilient against the USD while on the other hand, the US Dollar Index is preserving its bullish momentum as the robust performance of the US T-bond yields provide an additional support. At the moment, the DXY is at 91.71, up 0.45% on the day while the 10-year T-bond yield is gaining nearly 3% at %2.118.

According to a Financial Times article, Jeremy Corbyn, the leader of the opposition Labour Party, said that the UK could stay in the single market after Brexit during an interview on Radio 4. Now investors are waiting for the outcome of the EU Withdrawal Bill voting. "Lawmakers are due to vote later today or early Tuesday on the European Union (Withdrawal) Bill, which aims to convert around 12,000 EU laws and regulations into domestic statute on the day the country leaves the bloc in March 2019. The UK government has warned of a chaotic Brexit if lawmakers don't back the bill," wrote FXStreet Analyst Omkar Godbole on Monday.

• UK Labour Party’s Corbyn: UK could stay in the single market after Brexit - FT

With no more data left in the remainder of the day, the pair is likely to remain in its daily range unless the developments surrounding the vote increases the volatility. On Tuesday, the CPI and PPI data from the U.K. will be followed closely by the participants. A softer-than-expected reading in the inflation growth could dent the expectations of a BoE tightening move and put the GBP under selling pressure.

Technical outlook

1.3100 (psychological level/Sep. 8 low) could be seen as the first technical support ahead of 1.3000 (50-DMA) and 1.2935 (100-DMA). On the upside, resistances align at 1.3220 (daily high), 1.3265 (Aug. 3 high) and 1.3345 (Sep. 12, 2016, high).