• GBP/USD firming up amid less hawkish Fed outcome.
• Rallying yields trigger a fresh rebound in the US dollar.
• GBP bulls aim for the 50 DMA ahead of the US Q2 GDP.

GBP/USD is trading modestly higher while defending the 1.2150 level, having retreated from a fresh monthly high of 1.2186 reached earlier in the Asian session.

The decent rebound in the US dollar across the board, driven by the rally in the Treasury yields, is capping the recovery gains in cable. As the dust settles over the less hawkish Fed outcome, the US rates are recovering ground, as risk flows dominate and weigh negatively on the safe-haven American government bonds.

The Fed on Wednesday raised the policy rates by the anticipated 75 bps but adopted the meeting-by-meeting approach to guide the interest rates, paying attention to the slowdown in the economic activity while continuing its fight with inflation. The Fed’s abandoning its guidance and confirming net neutrality sparked the dollar sell-off.

On the other hand, GBP bulls are shrugging off the UK political developments, although fears over a potential recession in the country’s real-estate sector are boding ill for the domestic currency. Looking ahead, markets await the US Q2 advance GDP release for fresh signs on the health of the economy and the potential policy action by the Fed in the upcoming meetings.