GBP/USD holds moderate gains around 1.2450, below 2-week highs after US ADP.

• GBP/USD turns positive for the fifth day in a row and hits a two-week high.
• Declining chances of a Fed rate hike in June weigh on and support the USD.
• Upbeat US ADP report caps USD losses and caps the pair’s gains.

On Thursday, the pair GBP/USD reverses an intraday slide to 1.2400 and is in positive territory for the fifth day in a row. The pair, however, is back a few points from the two-week highs reached earlier in the North American session and is trading around 1.2400 after the release of the US ADP report.

The US dollar rose after Automatic Data Processing (ADP) reported that private sector employers added 278,000 jobs in May, above the 170,000 forecast, and capped GBP/USD gains. That said, the reduction in bets on a further 25 basis point rate hike by the Federal Reserve (Fed) in June keeps the dollar below its highest level since mid-March reached the previous day and continues to lend support to pair

It should be remembered that on Wednesday a duo of FOMC members expressed their willingness to pause interest rate hikes this month. On the other hand, moves to avoid an unprecedented US debt default undermine the safe haven dollar and act as a tailwind for GBP/USD. In fact, the US House of Representatives voted in favor of a bill to suspend the debt ceiling late on Wednesday and the deal now heads to the Senate for approval.

This, coupled with expectations that the Bank of England (BoE) could raise rates further, suggests that the path of least resistance for GBP/USD is to the upside. Even from a technical perspective, a move beyond the 50-day SMA adds credibility to the positive outlook. This, in turn, supports prospects for an extension of the recent rebound from 1.2300, or its lowest level since early April hit last week.

technical levels