GBP/USD retreats below mid-1.31s on broad-based USD strength

• US Dollar Index recovers daily losses in the NA session.
• GBP/USD continues to pull away from multi-week highs.
• 10-year T-bond yield surges above 3% to support USD's rise.

The GBP/USD pair came under a renewed bearish pressure in the last hour and erased all of its gains to turn red below mid-1.31s. As of writing, the pair was down 0.12% on the day at 1.3135.

The pair's recent downfall seems to be a product of a broad-based greenback strength. Despite the U.S. decision to impose tariffs on $200 billion worth of Chinese goods, the latest comments from President Trump helped the market sentiment improve and boosted the T-bond yields to help the greenback extend its upward correction. Although Trump reiterated that he could not allow China to take advantage of the U.S., he said that they were open to talks and it was possible to make a deal "at some point." The yield on 10-year T-bond rose to its highest level since May above the critical 3% mark and the US Dollar Index was last seen up 0.2% on the day at 94.69.

Meanwhile, commenting on Brexit talks, Irish Foreign Minister Simon Coveney told reporters that he desired the UK to focus on Brexit talks in Brussels and added that it was essential to make progress on the Irish backstop issue in the run-up to October. 

Wednesday economic docket in the UK will feature the inflation report. Markets expect the annual core-CPI to tick down to 1.8% in August from 1.9% seen in July. 

Technical levels to consider

The initial support for the pair could be seen at 1.3100 (100-DMA) ahead of 1.3055 (Sep. 14 low) and 1.3000 (psychological level). On the upside, resistances align at 1.3170 (daily high), 1.3215 (Jul. 26 high) and 1.3290 (Jul. 16 low).