GBP/USD climbs to fresh multi-month highs at 1.3200 as USD selloff continues

• GBP/USD touched 1.3200 for the first time in more than five months.
• US Dollar Index slumps to its lowest level in more than two years.
• Focus shifts to new round of Brexit talks.

The GBP/USD pair continues to push higher in the early American session on Tuesday as the greenback struggles to find demand. As of writing, the pair, which touched 1.3200 for the first time since early March in the last hour, was up 0.7% on the day at 1.3195.

DXY extends slide to fresh 27-month lows

In the absence of fundamental drivers and significant macroeconomic data releases, the US Treasury bond yields continue to impact the USD’s performance against its rivals. With the 10-year T-bond yield falling for the third straight day on Tuesday, the US Dollar Index (DXY) slumped to its lowest level in more than two years at 92.28 and seems to be having a tough time staging a recovery. At the moment, the DXY is down 0.55% at 92.31.

Meanwhile, the data published by the US Census Bureau showed on Tuesday that Housing Starts and Building Permits in the US increased by 22.6% and 181.8%, respectively, in July but was largely ignored by market participants.

On the other hand, investors will keep a close eye on headlines surrounding the new round of Brexit talks. Last week, the UK’s chief Brexit negotiator David Frost said that their assessment was that an agreement with the EU could be reached in September. If sides move closer to a deal following this week’s talks, we could see the GBP start gathering further strength against its peers.

Technical levels to watch for