GBP/USD holds below 1.2700 on firmer US Dollar, higher US yields

• GBP/USD trades softer around 1.2695 on the firmer USD on Thursday. 
• Investors await the US Q1 GDP on Thursday, which is expected to expand by 1.3%. 
• A softer UK inflation outlook triggered the rate cut expectation from the BoE. 

The GBP/USD pair weakens to 1.2695 during the early Asian session on Thursday. The downtick of the pair is supported by the stronger US Dollar (USD) amid the higher US yields and lower bets of the Federal Reserve (Fed) rate cut in September.

In recent weeks, Fed officials delivered a cautious tone on the inflation outlook, prompting traders to lower their bets on an easing cycle this year. Markets are pricing in a 50% chance that the Fed will hold interest rates in September, according to the CME FedWatch Tool. The combination of the Fed’s cautious stance and the stronger US economic data provide some support for the Greenback in the previous sessions.