GBP/USD recovers a major part of its intraday losses, climbs back above mid-1.2500s

GBP/USD attracts some dip-buyers following an intraday dip to the 1.2500 neighborhood.

The USD struggles to capitalize on its modest gains and lends some support to the major.

Bets for slower Fed rate cuts, rising US bond yields favor USD bulls and might cap gains.

The GBP/USD pair attracted fresh sellers on Tuesday and dropped to the 1.2500 neighborhood, closer to its lowest level since May 2024 during the Asian session. Spot prices, however, manage to rebound a few pips from the daily trough and currently trade around mid-1.2500s, down just over 0.10% for the day.

The underlying bullish sentiment across the global financial markets fails to assist the safe-haven US Dollar (USD) to capitalize on its modest intraday gains, which, in turn, offers some support to the GBP/USD pair. Any meaningful USD depreciation, however, seems elusive amid speculations that US President-elect Donald Trump's expansionary policy will reignite inflation and force the Federal Reserve (Fed) to cut interest rates slowly. 

Meanwhile, the initial market reaction to Scott Bessent's nomination as the US Treasury secretary turned out to be short-lived and is evident from a fresh leg up in the US Treasury bond yields. Adding to this, persistent geopolitical risks stemming from the Russia-Ukraine war and the ongoing conflicts in the Middle East should act as a tailwind for the safe-haven Greenback. This, in turn, might keep a lid on any further gains for the GBP/USD pair.