GBP/USD remains above 1.2650 near two-month highs

• GBP/USD reached a two-month high at 1.2674 as the US Dollar struggled amid weak jobless claims data.
• US Initial Jobless Claims increased to 219,000 in the previous week, surpassing the expected 215,000.
• Traders remain cautious due to ongoing concerns about the UK’s economic outlook.

GBP/USD edged lower after hitting a two-month high of 1.2674 on Friday, trading around 1.2670 at the time of writing during the Asian session. However, the pair gained ground as the US Dollar (USD) struggled amid weak jobless claims data and mixed signals from the Federal Reserve (Fed).

US Initial Jobless Claims for the week ending February 14 increased to 219,000, surpassing the expected 215,000. Continuing Jobless Claims also rose slightly to 1.869 million, just under the forecast of 1.87 million.

Additionally, the GBP/USD pair saw gains amid improved market sentiment after US President Donald Trump announced potential progress in trade negotiations with China, easing market concerns over tariffs.

Fed Governor Adriana Kugler noted on Thursday that US inflation still has "some way to go" before reaching the 2% target, acknowledging uncertainty ahead, according to Reuters.

Meanwhile, St. Louis Fed President Alberto Musalem highlighted the potential risks of stagflation and rising inflation expectations. Atlanta Fed President Raphael Bostic kept the door open for two rate cuts this year, depending on economic conditions.

Traders remain cautious due to ongoing concerns about the UK’s economic outlook. Bank of England (BoE) Governor Andrew Bailey warned this week that economic growth is expected to remain sluggish, with a softening labor market.

The Pound Sterling (GBP) tried to gain traction after a hotter-than-expected UK Consumer Price Index (CPI) report for January released on Wednesday. Governor Bailey had already indicated that a short-term inflation spike, driven by volatile energy prices, wouldn’t be persistent.