GBP/USD edges lower toward mid-1.31s on broad-based USD strength

The selling pressure on the GBP/USD pair remains persistent in the second half of the day on Tuesday as the greenback continues to gather strength against its peers. As of writing, the pair is trading at 1.3165, losing 0.65% on the day.

Earlier in the day, the pair rose to 1.3285 ahead of the BoE Governor Carney's speech but struggled to rise further as investors didn't want to commit to large positions. Today's data from the U.K. came in largely in line with market expectations. Monthly inflation measured by the CPI eased to 0.3% in September, pushing the annual CPI-inflation to 3%. 

Testifying before the Treasury Select Committee (TSC), in London, Carney said that a rate hike in coming months would be appropriate. Despite that comment, however, the GBP failed to gain traction as Carney didn't deliver any comments that would signal a continuous tightening strategy in 2018.

• BOE’s Carney: Bank rate, not QE, will be relevant instrument for policy for some time to come

On the other hand, the US Dollar Index extended its daily upside during the American trading hours and reached its best level in a week at 93.60 on the back of upbeat macroeconomic data releases from the U.S. At the moment, the index is consolidating its gains at 93.50, adding 0.4% on the day.

Later in the session, Philly Fed President Patrick Harker is going to deliver a speech but is unlikely to trigger any sharp fluctuations in the DXY as markets think that a December Fed rate hike is imminent. 

Technical outlook

The initial support for the pair could be seen at 1.3090/1.3100 (100-DMA/psychological level) ahead of 1.3000 (psychological level) and 1.2910 (Sep. 5 low). On the upside, resistances are located at 1.3200 (50-DMA/psychological level), 1.3270 (20-DMA) and 1.3340 (Oct. 12 high).With today's heavy fall, the RSI indicator for the pair turned south below the 50 mark, signaling a buildup in the bearish momentum. 

Today's data from the U.S.

• US: Builder Confidence rises four points in October - NAHB
• US: Industrial production rose 0.3 percent in September
• US: Import prices rise 0.7% in Sept on higher fuel prices; export prices increase 0.8%