GBP/USD consolidates daily gains below 1.32 as markets await tax plan headlines

• Upbeat employment data from the UK fueled the GBP's rise on Wednesday.
• GBP/USD eases off from 5-day highs above 1.32.
• DXY erases daily losses, remains below the 94 mark.

The GBP/USD pair, which advanced to its highest level in five days at 1.3212 during the European session, lost its traction in the second half of the day and gave back a majority of its daily gains. At the moment, the pair is trading at 1.3175, still up 10 points, or 0.08%.

Cable struggles to hold above 1.32 as USD makes a comeback

Earlier in the day, the data from the UK showed that the unemployment remained unchanged at 4.3% in September while the number of unemployed people rose by 1.1K, coming in better than the market estimate of 2.3K. Positive data allowed the GBP to gather further strength against the USD. However, the US Dollar Index, which plummeted to 93.30 with the initial reaction to the inflation data from the U.S., finally gained some traction in the American trading hours and turned flat near the 93.70 area. However, this recent recovery seems to be a short-term correction as the index continues to stay below the critical 94 mark.

• US: CPI for all items increases 0.1% in October as shelter index rises

Investors are now waiting for the developments surrounding the tax bill. The latest headlines suggest that the House Republicans will be voting on revisions to the bill on Thursday. "The head of the U.S. Senate Finance Committee proposed major changes to a Republican tax reform plan, adding a repeal of Obamacare’s health insurance mandate and making corporate tax cuts permanent while ending individual cuts in 2025," Reuters wrote in a recent report.

• Cut corporate taxes to boost investment and wages? - BBH

Technical levels to consider

The pair could face the first hurdle at 1.3140 (50-DMA) ahead of 1.3320 (Nov. 1 high) and 1.3400 (psychological level). On the downside, supports align at 1.3140 (100-DMA), 1.3040 (Nov. 3 low) and 1.3000 (psychological level). 

• GBP/USD fades in play at 1.32 area - Scotiabank