GBP/USD steadily climbs back closer to weekly top, eyes 1.2200 mark ahead of BoE meeting

• GBP/USD scales higher during the Asian session on Thursday and draws support from a weaker USD.
• Expectations that the Fed is done raising rates and declining US bond yields weigh heavily on the buck.
• A positive risk tone further undermines the safe-haven USD as the focus now shifts to the BoE meeting.

The GBP/USD pair is seen building on the previous day's bounce from sub-1.2100s and gaining some follow-through positive traction during the Asian session on Thursday. The momentum lifts spot prices to the top end of the weekly range, closer to the 1.2200 round figure, and is sponsored by a modest US Dollar (USD) weakness.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats further from a near one-month high touched on Wednesday in the wake of expectations that the Federal Reserve (Fed) may be done raising interest rates. The US central bank, as was widely anticipated, decided to keep the key overnight interest rates unchanged in the 5.25%-5.50% range, or a 22-year high for the second time in a row. In the accompanying monetary policy statement, the Fed acknowledged the need for another rate hike on the back of the US economy's unexpected resilience. However, Fed Chair Jerome Powell's comments at the post-meeting press conference raised doubts if the US will hike rates again.

Powell said that the Fed has a long way to go to bring inflation back to the 2% target, though noted that financial conditions have clearly tightened and cited plenty of risks. Investors, meanwhile, seem convinced that the Fed will start cutting rates next year, which is evident from a further steep decline in the US  Treasury bond yields and is seen weighing on the buck. Apart from this, a generally positive tone around the equity markets turns out to be another factor undermining the safe-haven Greenback and lending support to the GBP/USD pair. It, however, remains to be seen if bulls are able to capitalize on the move up or opt to wait on the sidelines as the focus shifts to the Bank of England (BoE) policy meeting later today.

The UK central bank is all but certain to maintain the status quo amid signs of slowing economic activity and decreasing inflationary pressures. Investors, meanwhile, will keep a close eye on the Monetary Policy Committee (MPC) vote split, which will influence market expectations about future rate decisions and play a key role in influencing the British Pound (GBP). Apart from this, the US economic docket, featuring the usual Weekly Initial Jobless Claims and Factory Orders data, will be looked upon to grab short-term opportunities around the GBP/USD pair. The market attention, however, will remain glued to the release of the closely-watched US monthly employment details, popularly known as the NFP report on Friday.

Technical levels to watch