GBP/USD moves away from multi-month low set on Thursday, remains below 1.2500

• GBP/USD attracts some buying during the Asian session, albeit lacks follow-through.
• The USD consolidates its recent gains to a six-week high and lends support to the pair.
• Bets for one more rate hike by the Fed in 2023 to act as a tailwind for the Greenback.
• The BoE's signal that the rate-hiking cycle is nearing the end should cap the major.

The GBP/USD pair edges higher during the Asian session on Friday and moves away from a three-month high, around the 1.2445 region touched the previous day. Spot prices, however, remain below the 1.2500 psychological mark and lack bullish conviction, warranting some caution before positioning for any meaningful appreciating move.

A modest pullback in the US Treasury bond yields, along with signs of stability in the equity markets, hold back traders from placing fresh bullish bets around the safe-haven US Dollar (USD), especially after the recent rally to its highest level since March. This turns out to be a key factor lending some support to the GBP/USD pair. The downside for the USD, however, seems cushioned in the wake of growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer.

Moreover, the markets are still pricing in the possibility of one more 25 bps lift-off by the end of this year. The bets were reaffirmed by the incoming stronger-than-expected US macro data, including the Weekly Jobless Claims on Thursday. The hawkish outlook should act as a tailwind for the US bond yields and the Greenback. This, along with expectations that the Bank of England (BoE) is nearing the end of its policy tightening cycle, could weigh on the British Pound and cap the GBP/USD pair.

In fact, BoE Governor Andrew Bailey told lawmakers on Wednesday that the central bank is much nearer to ending its run of rate increases, though warned that borrowing costs might still have further to rise because of stubbornly high inflation. In the absence of any relevant market-moving economic releases, either from the UK or the US, the fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has formed a near-term bottom.

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