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During the Tokyo session, the GBP/USD pair is displaying a back-and-forth pattern below the psychological resistance of 1.2500. The Cable fails to take decisive action due to the absence of vital stimuli. The USD Index is attempting to defend its downside near 1.2480, but the downside appears to be favoured as the White House has agreed to raise the US borrowing limit to pay for the President's spending initiatives.

After a bullish session on Wednesday, S&P500 futures are indicating modest losses in Asia. Fears of a catastrophic US default have diminished drastically, resulting in a positive market sentiment. Around 102.81, the US Dollar Index (DXY) is fluctuating in a confined range. A further positive development regarding the ratification of the US debt-ceiling increase would exert additional pressure on the USD Index, as a greater supply of US Dollars in the economy would diminish its attractiveness.

In addition, rising expectations of a hiatus in the Federal Reserve's (Fed) rate-hiking cycle are exerting pressure on the USD index. According to a Reuters poll, the present interest rate of 5.00-5.25 percent will remain in place through the end of 2023.

Meanwhile, policymakers at the Bank of England (BoE) are still under pressure to reduce the persistent inflation in the United Kingdom. BoE Governor Andre Bailey stated on Wednesday that the UK labor market is loosening more slowly than anticipated in February. This would diffuse some of the current double-digit inflation in the United Kingdom.

In contrast, UK Finance Minister Jeremy Hunt's pledge to reduce higher taxes in order to alleviate the burden of higher inflation on households could stimulate retail demand.

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