GBP/USD slumps to fresh multi-week lows near 1.1900

• GBP/USD came under heavy bearish pressure on Tuesday.
• US Dollar outperforms its rivals as investors return from holidays.
• Investors keep an eye on political developments in the UK.

After having spent the Asian session in a very tight range slightly below 1.2100, GBP/USD fell sharply in the European morning and touched its lowest level in a month near 1.1900. The pair was last seen losing 1.1% on the day at 1.1915.

Despite a lack of fundamental drivers, the US Dollar started the day on a firm footing with investors returning from the New Year holiday. The US Dollar Index, which lost nearly 1% in the last two trading days of 2022, rose decisively and advanced above 140.70, where it was up 1.2% on a daily basis.

Meanwhile, political jitters in the UK seem to be putting additional weight on the Pound Sterling. The Telegraph reported over the weekend that British Prime Minister Rishi Sunak had shelved the childcare reform that was designed to help parents save money and return to work. Additionally, the first of five consecutive days of national rail strikes have gone underway on Tuesday. 

Later in the day, November Construction Spending and S&P Global's December (final) Manufacturing PMI from the US will ve looked upon for fresh impetus. Ahead of these data releases, Wall Street's main indexes remain on track to open in positive territory with US stock index futures rising arounf 1% during the European trading hours. Nevertheless, the risk positive market environment is yet to detail the US Dollar's rally.

Technical levels to watch for