GBP/USD is holding steady near multi-month highs amid a weaker dollar, just below the mid-1.2900 level

GBP/USD has had a positive start to the new week, trading in the 1.2940 to 1.2945 range in Asia, or the four-month high hit on Friday. Additionally, the bearish sentiment surrounding the U.S. dollar (USD) supports the continuation of momentum after breaking above the 200-day simple moving average (SMA) last week.

In fact, the U.S. Dollar Index (DXY) is currently trading near its lowest level since early November following its reaction to weak U.S. monthly jobs data released on Friday. Nonfarm payrolls (NFP) data showed that the U.S. economy added 151,000 jobs in February, below market expectations. Also, last month's data was revised down to 125,000, and the unemployment rate unexpectedly rose to 4.1% from 4.0% in January.

This heightened concerns that President Donald Trump's policies will hurt U.S. economic activity and suggested the Federal Reserve is still planning multiple interest rate cuts this year. The market is currently pricing in around three 25 basis point rate cuts this year, which continues to weigh on the dollar and support the GBP/USD pair. Dollar bulls failed to get any respite from comments from Federal Reserve Chairman Jerome Powell that the U.S. central bank is in no rush to cut interest rates.

On the other hand, the British pound (GBP) was supported by expectations that the Bank of England (BoE) will cut interest rates more slowly than other central banks, including the Federal Reserve. This became another factor supporting the GBP/USD pair and validated the positive outlook. In the absence of any relevant market-driving economic data from either the UK or the US, the US dollar will continue to influence spot prices and allow traders to take advantage of short-term opportunities.