GBP/USD tumbles toward 1.1200 as pound weakens and DXY soars

• US Dollar comes back into play, DXY up by 1.25%.
• UK PM Truss sticks to her plan, pound resumes slide.
• GBP/USD drops by more than 200 pips on Wednesday.

The GBP/USD is trading at the lowest level in two days around 1.1230, after falling more than 270 pips from the intraday high. Earlier the pair peaked at 1.1496, the highest level since September 15.

The combination of the dollar being back into play and the pound's weakness sent cable sharply on Wednesday. It has erased more than half of the week's gains and is approaching the 1.1200/05 support area.

The pound was already trading with some weakness that started around UK PM Liz Truss's speech. She spoke at the Conservative Party conference defending his plan. She said that cutting taxes was the "right thing to do "morally and economically". Truss mentioned that it is correct that the Bank of England sets interest rates independently. His words did not bring support for the pound.

GBP/USD started to decline from above 1.14000 and then accelerated amid a stronger US dollar. The DXY is rising by 1.25%, as US yields move sharply to the upside. The US 10-year year is at 3.77%, far from the 3.56% seen on Tuesday.

Economic data from the US came in better-than-expected on Wednesday helping the US Dollar rise across the board. Private sector employment rose by 208K in September according to ADP, above the market expectation of 200K. ISM Services PMI came in at 56.7, above the expected 56; the Employment Index rose unexpectedly to 53 from 50.2. On Friday, the US official employment report is due.

Technical levels