GBP/USD pares daily gains, trades below 1.3600 on renewed USD strength

• GBP/USD reversed its direction after US inflation data.
• US Dollar Index edges higher toward 94.50 following earlier decline.
• Eyes on Brexit headlines, FOMC September Meeting Minutes.

The GBP/USD pair reversed its direction after climbing toward 1.3650 earlier in the day and retraced the majority of its daily advance. As of writing, the pair was up only 0.05% on the day at 1.3592.

DXY recovers on inflation data

Renewed dollar strength on US September inflation report seems to be weighing on GBP/USD at the beginning of the American session. The monthly report published by the US Bureau of Labor Statistics revealed that the annual Consumer Price Index (CPI) edged higher to 5.4% in September from 5.3% in August. Additionally, the Core CPI, which excludes volatile food and energy prices, stayed unchanged at 4% on a yearly basis.

Reflecting the positive impact of the CPI data on the greenback, the US Dollar Index (DXY) rebounded from the daily low it touched at 94.24 and was last seen losing 0.7% at 94.43.

Later in the day, investors will be keeping a close eye on the developments surrounding Brexit. Maroš Šefčovič, European Commission Vice President of Interinstitutional Relations and Foresight, will deliver the EU's proposal on the Northern Ireland Protocol at 1630 GMT.

Moreover, the FOMC will publish the minutes of its September meeting at 1800 GMT. 

FOMC Minutes Preview: Fed to reiterate taper message, sending the dollar up, stocks down.

Technical levels to watch for