GBP/USD consolidates daily losses below 1.32

• GBP/USD looks to end the day below 1.32 for the first time this year.
• US Dollar Index fails to break above 95.
• Risk appetite remains weak on Tuesday.

The GBP/USD pair slumped to its worst level since November of 2017 at 1.3150 in the early NA session and went into a consolidation phase. As of writing, the pair was trading at 1.3165, losing 0.6%, or 80 pips, on the day.

The USD valuation remains as the main driver of the pair’s price action in the FX markets on Tuesday. After retracing a portion of last week’s gains on Monday, the US Dollar Index gathered momentum on Tuesday as the lack of fundamental catalysts allowed investors to stay focused on Fed’s monetary policy outlook. However, with the demand for the US T-bonds rising amid the risk-off environment, the yield on the 10-year reference lost nearly 2% and made it difficult for the greenback to preserve its strength. At the moment, the DXY is up 0.35% on the day at 94.75.

Today’s data from the U.S. showed that the housing starts increased by 5% in May while building permits contracted by 4.6%.

On the other hand, earlier today, a draft of the EU summit conclusion statement showed that EU leaders  were concerned about the lack of progress regarding the Ireland border issue.

There won’t be any other macroeconomic data releases in the remainder of the day, and the pair is unlikely to make a sharp move in either direction before closing the day.

Technical outlook

The pair could encounter the first technical support at 1.3135 (Nov. 16, 2017, low) before 1.3100 (psychological level) and 1.3040 (Nov. 3, 2017, low). On the upside, short-term resistances align at 1.3200 (psychological level), 1.3270 (daily high) and 1.3334 (20-DMA).