GBP/USD trades above 1.2300 as market sentiment increases and the US ISM Services PMI is being watched.

VOT Research Desk

In the Asian session, the GBP/USD pair’s auction profile has moved over the pivotal threshold of 1.2300. Due to the market participants’ strong buying interest in the Cable, the risk-on profile has become even more favorable.

The major has renewed its five-month high over 1.2340 and is anticipated to continue rising as there is a lot of interest in risky assets.

After showing a respectable demand for labor by the US economy, stronger future demand for services would cause a risk-off state of mind.

Strong US economic demand would suggest higher expectations for short-term inflation, which might force the Fed to keep up the pace of rate hikes currently being made. In November, food inflation in the United Kingdom rose to a 45-year high of 12.4%, exceeding the previous estimate of 11.6% late October.

Projections for the next Christmas season have been weakened by a recent impetuous action in the food sector.

Households’ lower discretionary income due to higher food prices could affect their ability to make Christmas purchases.