GBP/USD advances toward mid-1.31s on USD sell-off

• DXY plummets to daily lows below the 94.70 handle.
• The GBP/USD pair extends recovery above 1.31 on USD weakness.
• A daily close above 100.DMA is likely to open the door for further gains.

The GBP/USD pair gained traction in the NA session and reached its highest level since last week's sharp drop witnessed on Thursday after the dovish BoE remarks. As of writing, the pair was trading at 1.3152, adding 75 pips, or 0.57% on the day.

DXY struggles to rise above 95

Despite the lack of a clear fundamental driver behind that recent USD weakness, a late rally witnessed in crude oil prices, which lifted the barrel of West Texas Intermediate to a fresh 2-year high above the $57 handle, seems to be weighing on the greenback. The US Dollar Index, which spent the majority of the day consolidating a little below the important 95 handle, is now at 94.66, losing 0.18% on the day. Meanwhile, New York Fed President William Dudley delivered a speech during the session but refrained from commenting on news of his early retirement, failing to trigger any market reactions.

• With Dudley resigning chances of Trump’s Fed rise

On the other hand, the GBP seems to be gathering strength against its other major rivals as well. In fact, the EUR/GBP pair is losing nearly 50 pips on the day. 

Technical outlook

FXStreet's technical confluence indicator determines the first technical hurdle at 1.3175 (5-DMA/H4 - 50-SMA) ahead of 1.3275 (50-DMA) and 1.3320 (Nov. 1 high). Following today's upsurge, the 100-DMA, which is located at 1.3135 is now seen as a critical support before 1.3060 (daily low) and 1.3000 (psychological level). 

• GBP/USD bearish, could test 1.2970 – UOB