GBP/USD climbs above 1.25 as USD comes under pressure on Powell's cautious remarks

• FOMC Chairman Powell says there is risk of persistent weak inflation.
• UK economy rebounds in May following April's contraction.
• Coming up: Powell's testimony and FOMC's June meeting minutes.

The GBP/USD pair took advantage of the broad selling pressure surrounding the greenback and gained more than 50 pips in the last 30 minutes to break above the 1.25 mark. As of writing, the pair was up 0.4% on a daily basis at 1.2516. 

Ahead of his semi-annual testimony before the Congress, the Fed released Chairman Powell's prepared statement, which highlighted that the Fed acknowledges that trade uncertainties and concerns about global economy continued to weigh on the U.S. economy and the Fed would act "as appropriate" to sustain the economic growth.

Moreover, "There is a risk weak inflation will be even more persistent than fed currently anticipates," the statement read to confirm a dovish shift at the July meeting. With the initial reaction, the US Dollar Index erased a large portion of this week's gains and was last down 0.4% on the day at 97.11.

Earlier today, the UK's Office for National Statistics reported that the UK economy expanded by 0.3% in the three months to May following April's disappointing reading of -0.4% and matched the market's expectation to help the British pound gain strength during the European morning.

Later in the session, FOMC Chairman Powell will respond to questions from members of the Congress after delivering his statement. More importantly, the FOMC will release the minutes of its June meeting.

Technical levels to watch for