GBP/USD gains traction above 1.2550 on thin trading volume

• GBP/USD trades in positive territory around 1.2580 in Monday's Asian session. 
• Higher US bond yields and Trump's policies could lift the USD and cap the pair's upside. 
• BoE dovish bets could undermine the GBP against the Greenback. 

The GBP/USD pair extends the recovery to near 1.2580 during the Asian trading hours on Monday. The Bank of England (BoE) policymakers became more divided about whether rate cuts were needed to tackle a slowing economy. The BoE's Monetary Policy Committee (MPC) voted 6-3 to keep interest rates on hold, a bigger split than expected. Trading volume is lighter than usual ahead of the New Year holiday. 

Rising US Treasury yields could act as a tailwind for the US Dollar (USD), with the benchmark 10-year note hitting a more than seven-month high on Friday. Meanwhile, the yield hovers around 4.620% on Monday. Furthermore, the expectations that President-elect Donald Trump's policies of looser regulation, tax cuts, tariff hikes, and tighter immigration could fuel inflation and slow the pace of the US Federal Reserve (Fed) rate cut contribute to the USD's upside. 

The BoE decided to keep the interest rate on hold at 4.75% in the December meeting and maintained its guidance for "gradual" interest rate cuts next year. BoE Governor Andrew Bailey said, "We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can't commit to when or by how much we will cut rates in the coming year." An increase in BoE's dovish bets for the next year might weigh on the Pound Sterling (GBP) against the Greenback in the near term.