GBP/USD inches above 1.2650 as DXY tumbles on positive market mood

• GBP/USD is holding above 1.2650 amid an improvement in the risk appetite of investors.
• The US economy may have added 310k jobs in the labor market last month.
• The odds of a bumper rate hike by the BOE are scaling higher.

The GBP/USD pair is advancing sharply higher in the Asian session as investors have underpinned the risk-on market impulse, which has diminished the safe-haven appeal. The pound bulls have pushed the asset above 1.2650. The asset is hovering around the previous week’s high at 1.2667 and a decisive move beyond the same will unleash the sterling bulls to an upside of 1.2700.

Mounting price pressures in the US economy are clearing the obscurity over the interest rate decision by the Federal Reserve (Fed) in its June monetary policy. The US Consumer Price Index (CPI) is sustaining above 8% and a whopping inflation rate is not healthy for the growth prospects of an economy. It always keeps alive the odds of a recession in the economy. This week, the market participants will keep an eye over the release of the US Nonfarm Payrolls (NFP). As per the market consensus, the US economy may have added 310k jobs in the labor market vs. the former figure of 428k. The US economy is continuously outperforming the consensus on the job data. The Unemployment Rate is seen unchanged at 3.6%.

On the pound front, recession fears are alarming amid the heated inflationary pressures. The display of the UK inflation above 9% has left no other choice for the Bank of England than to announce a 50 basis point (bps) rate hike. It is worth noting the BOE elevated its interest rates by 25 basis points (bps) in its May monetary policy.