GBP/USD eyes more gains above 1.2250 amid upbeat market mood, UK GDP eyed

The GBP/USD pair is gathering momentum to surpass the immediate hurdle of 1.2250 in the early Tokyo session. The Cable is displaying a sideways auction profile after sustaining above the round-kevel resistance of 1.2200. Positive market sentiment has tilted bias for more upside in the Cable ahead. The US Dollar Index (DXY) is expected to remain on the tenterhooks as investors are shifting their focus to the monetary policy meeting by the Federal Reserve (Fed), which is due next week.

S&P500 snapped a three-day losing streak and recovered firmly after investors shrugged off recession fears. The 10-year US Treasury yields followed optimism in US equities and escalated to 3.49%.

The Pound Sterling is likely to remain in action as investors are awaiting the release of the monthly Gross Domestic Product (GDP) data, which will release on Monday. As per the estimates, the United Kingdom GDP data will improve to 0.1% contraction vs. the prior 0.5% contraction. Apart from that, Industrial and Manufacturing Production figures will be of utmost importance.

Key trigger that will bring power-pack action in the Pound Sterling is the interest rate decision by the Bank of England (BOE). A poll on interest rate hike expectations by the BOE taken by Reuters speaks that the Bank of England will add another 50 basis points (bps) next week and take borrowing costs to 3.50%, despite the economy falling into recession.

On the United States front, rising expectations of a slowdown in an interest rate hike by the Federal Reserve (Fed) are weighing on the US Dollar. Fed chair Jerome Powell is expected to decelerate the current pace of interest rate hike and will announce a 50 bps addition in borrowing costs.