GBP/USD jumps to 1.2535 area, highest since June 2022 amid notable USD supply

• GBP/USD gains positive traction for the fourth successive day and touches a fresh YTD peak.
• Expectations for an imminent Fed rate-hike pause weigh on the USD and remain supportive.
• Acceptance above the 1.2500 mark favours bulls and supports prospects for additional gains.

The GBP/USD pair gains positive traction for the third successive day on Thursday and climbs to the 1.2530 area, or its highest level since June 2022, during the early North American session.

The US Dollar (USD) selling picks up pace following the release of the softer-than-expected US Producer Price Index (PPI) and turns out to be a key factor pushing the GBP/USD pair higher. In fact, the US Bureau of Labor Statistics reported that the US PPI fell to the 2.7% YoY rate in March from 4.9% previous (revised down from 4.6%). The annual Core PPI, meanwhile, declined to 3.4% during the reported month from 4.5% in February, matching analysts' estimate. On a monthly basis, the PPI and the Core PPI came in at -0.5% and -0.1%, respectively.

This comes on the back of the softer US CPI report on Wednesday and lifted hopes that disinflation is progressing smoothly, reaffirming expectations that the Federal Reserve (Fed) will soon pause its rate-hiking cycle. Moreover, the markets now expect the US central bank to start cutting rates during the second half of the year, which leads to a further decline in the US Treasury bond yields. Apart from this, a generally positive tone around the equity markets is seen denting demand for the safe-haven buck and lending support to the GBP/USD pair.

The aforementioned factors, to a larger extent, overshadow the mostly disappointing UK macro data released this Thursday. In fact, the UK Office for National Statistics reported that the economic growth remained flat in February as compared to the 0.1% rise estimated. Adding to this, the UK Manufacturing and Industrial Production figures missed expectations, overshadowing the better-than-expected Trade Balance data. That said, the recent mixed signals from the Bank of England (BoE) policymakers over future rate hikes might cap gains for the GBP/USD pair.

From a technical perspective, a move beyond the previous YTD peak and acceptance above the 1.2500 psychological mark could be seen as a fresh trigger for bullish traders. This, in turn, supports prospects for a further near-term appreciating move. Hence, some follow-through strength, towards reclaiming the 1.2600 round figure, looks like a distinct possibility.

Technical levels to watch