GBP/USD Stable Near Highest Level Since June 2022, Above Mid-1.2500s.

The GBP/USD pair is currently experiencing a bullish consolidation phase, trading within a narrow range just below its highest level since June 2022. The pair remains steady above mid-1.2500s, waiting for a fresh catalyst to indicate the next direction.

However, a modest recovery of the US Dollar from a week-long low acts as a headwind and keeps the GBP/USD pair below the 1.2600 round-figure mark. Signs of stress at PacWest Bancorp, a US regional bank, have sparked fears of a banking crisis in the US, along with looming recession risks, which temper investors’ appetite for riskier assets. 

This has resulted in a generally weaker tone around the equity markets, leading to a revived demand for the safe-haven Greenback.

Despite the Fed’s less hawkish outlook, the USD bulls appear reluctant to place aggressive bets. The US central bank raised interest rates by 25 bps on Wednesday and opened the door for a possible pause in June. 

Furthermore, concerns over the US debt ceiling continue to act as a headwind for US Treasury bond yields, which should further contribute to keeping a lid on the USD and limit the downside for the GBP/USD pair, at least for now.

On the economic data front, the US Initial Weekly Jobless Claims rose more than expected, failing to provide any meaningful impetus. With traders moving to the sidelines, all eyes are now keenly awaiting the closely-watched US monthly jobs data, known as the NFP report, on Friday. 

This report will play a key role in influencing the USD price dynamics and determine the near-term trajectory for the GBP/USD pair.

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