GBP/USD advances to 1.2625 on softer USD, remains below 100-day SMA support breakpoint

The GBP/USD pair gains some positive traction for the second successive day on Tuesday and recovers further from its lowest level since June 13, aroun

d the 1.2550-1.2545 area touched last week. Spot prices trade around the 1.2620-1.2625 zone during the Asian session, up over 0.15% for the day, though remain below the 100-day Simple Moving Average support breakpoint.

Retreating US Treasury bond yields drags the US Dollar away from a nearly three-month top set last week, which, in turn, is seen as a key factor pushing the GBP/USD pair higher. Apart from this, a generally positive risk tone, bolstered by new measures rolled out by China over the weekend to draw investors back into its battered stock markets, further undermines the safe-haven Greenback.

That said, the possibility of more interest rate hikes by the Federal Reserve should act as a tailwind for the US bond yields and help limit any meaningful USD downfall, at least for now. In fact, Fed Chairsaid on Friday that inflation remains too high and that the central bank is ready to continue hiking rates to tame persistently high prices. Furthermore, a surprisingly resilient US economy could force the Fed to keep interest rates higher for longer.

Apart from this, growing acceptance that the Bank of England will pause its rate-hiking cycle after the widely anticipated 25 bps lift-off at the September meeting might further contribute to capping thepair. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent downward trajectory witnessed over the past six weeks or so has run its course and positioning for any meaningful appreciating move.

, featuring the Conference Board's Consumer Confidence Index and JOLTS Job Openings data, for some impetus later this Tuesday.

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