GBP/USD leaps above 1.25 amid USD weakness

The GBP/USD gathered momentum in the last two hours and jumped above the 1.25 mark as the US dollar index dropped to its daily low at 100.12. At the moment, the pair is up 0.54% on the day at 1.2535.

Fed doesn't shed the dovish tone

The dovish statements from the FOMC speakers put some pressure on the greenback in the last trading session of the first quarter of 2017. St. Louis Fed President James Bullard, on two separate occasions today reiterated his view on the monetary policy by stating that the Fed does not need to be preemptive on rates and he would back more rate hikes only if inflation threatened to go significantly higher. Earlier in the session, Minneapolis Fed President Neel Kashkari argued that they were still coming up short on inflation target as Friday's core PCE inflation data suggested.

Fed's Kashkari: No reason to hurry up and raise rates

US economy losing momentum

Furthermore, the weak growth seen in the consumer spending figures is expected to be a drag on the economic growth in the United States. The Federal Reserve Bank of New York today announced that it revised its GDP growth forecast lower by one-tenth of a percentage point for the first and second quarters amid negative news from consumption data.

NY Fed Nowcast: GDP growth 2.9% for 2017:Q1 and 2.6% for 2017:Q2

Technical outlook

Monday's high at 1.2615 could be seen as the first technical resistance for the GBP/USD, followed by 1.2680 (Feb. 1 high) and 1.2730 (Dec. 14 high). On the downside, below 1.25 (psychological level), the bearish slide could extend towards 1.2405/10 (50-DMA/100-DMA) and 1.2370 (20-DMA).