GBP/USD finds cushion near 1.2300 as USD Index fails to extend upside, UK GDP eyed

• GBP/USD has sensed buying interest near 1.2300 as USD Index has faced exhaustion in the upside momentum.
• The USD Index has failed to capitalize on rising hopes for one more rate hike by the Fed.
• As per the consensus, UK’s growth has remained stagnant in the fourth quarter of CY2022.

The GBP/USD pair has gauged support near the round-level support of 1.2300 in the early European session. The Cable is aiming to extend recovery further amid a loss in the upside momentum in the US Dollar Index (DXY). The USD Index has failed to stretch its upside further above the previous day’s high at 102.78. It seems that the improved risk appetite of investors has weighed on the USD Index.

Meanwhile, S&P500 futures have recovered their entire losses reported in the Asian session. The 500-US stocks basket futures are aiming to carry forward the super-bullish bias observed on Wednesday. US equities were heavily bought on Wednesday as the street anticipated no more casualties in the US baking system ahead. Also receding fears of a US banking crisis have weighed down demand for US government bonds. The yields offered on 10-year US Treasury bonds have escalated to near 3.58%.

The USD Index has failed to capitalize on rising hopes for one more rate hike by the Federal Reserve (Fed). Bloomberg reported that Fed chair Jerome Powell is anticipating one more rate hike this year when asked in a private meeting with US lawmakers about how much further the central bank will raise interest rates this year.

For further guidance, investors will keep an eye on US core Personal Consumption Expenditure (PCE) Price Index data. A steady figure is expected in households’ spending, which might ease hopes of a rate hike in the May policy meeting.

On the United Kingdom front, the Pound Sterling will remain in action as investors are awaiting the release of the Gross Domestic Product (GDP), which will be announced on Friday. As per the consensus, UK’s growth has remained stagnant in the fourth quarter of CY2022. Annual GDP is expected to remain steady at 0.4%.