GBP/USD surges above 1.30 as DXY drops to weekly lows

The GBP/USD gained traction in the late NA session and reached its highest level since Tuesday at 1.3031. As of writing, the pair is trading at 1.3012, gaining 34 pips, or 0.26%, on the day.

The pair's recent upsurge seems to be fueled by a broad-based greenback sell-off. Although the US Dollar Index was able to recover back above the 93 handle following the initial drop amid weaker-than-expected inflation data from the U.S., it came under a renewed selling pressure in the last hour as the U.S. Treasury-bond yields fell sharply with the 10-year reference dropping to its lowest level in six weeks at 2.182%. As of writing, the US Dollar Index was at 92.86, losing 0.47%.

• US Treasuries: Yields under pressure after weaker-than-expected CPI data

Despite that recent rise, the pair is still looking to close the week with losses as this week's data from the U.K. failed to impress the markets and the uncertainty surrounding the Brexit negotiations continue to force investors to refrain from making large cable positions. 

With no more data left in the remainder of the session, the pair's price action could continue to be driven by the DXY movements. 

Technical outlook

The RSI on the daily graph confirms the short-term neutral outlook as well as it moves sideways near the 50 mark. The pair could encounter the first technical support at 1.2955 (50-DMA) before 1.2915 (100-DMA) and 1.2810 (Jul. 12 low). On the upside, resistances align could be seen at 1.3065 (20-DMA), 1.3160 (Aug. 4 low) and 1.3200 (psychological level).

• GBP offers little appeal - Westpac