GBP/USD pushes higher toward 1.32 as USD sell-off continues

• DXY extends losses below 94 on falling T-bond yields.
• BoE's Cunliffe says Brexit's impact on the economy is uncertain.
• Employment data from the UK is likely to be the next catalyst for the GBP.

After easing below the 1.31 handle amid disappointing PPI and retail price index data from the United Kingdom during the European session, the GBP/USD pair reversed course and rose to a fresh 2-day high at 1.3155 in the last hour. At the moment, the pair is trading at 1.3150, adding 0.27% on the day.

Although today's data showed a higher-than-expected PPI growth in October in the United States, the US Dollar Index fell below the 94 handle for the first time in nearly three weeks as a more than 1% drop seen in the 10-year US T-bond yield weighed on the greenback. As of writing, the index was at 93.77, losing 0.67% on the day. 

Meanwhile, Bank of England Deputy Governor Jon Cunliffe's recent dovish comments failed to cap the pair's upside. Cunliffe, one of the two policymakers who voted against the rate hike in the BoE's latest meeting, argued that there wasn't a risk that the domestic inflation pressure would undershoot the MPC's forecast and further added that sterling depreciation was not causing 2nd-round effects.

• BoE's Cunliffe: Can afford to wait until there is "clear evidence" of faster pay growth before raising rates

On Wednesday, ILO unemployment rate and claimant count change data from the UK will provide the next clue about the current state of the British economy. Upbeat readings are likely to help the GBP strengthen against its peers.

Technical outlook

With today's advance, the pair is looking to close the day above the critical 100-DMA level, which could allow for further gains towards 1.3250 (50-DMA), 1.3320 (Nov. 1 high) and 1.3400 (psychological level). On the downside, supports could be seen at 1.3145 (100-DMA), 1.3040 (Nov. 3 low) and 1.3000 (psychological level). 

• Sterling not finding as much support as the euro - Scotiabank