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GBP/USD CORRECTS FROM ONE-YEAR PEAK AMID MODEST USD STRENGTH, DOWNSIDE SEEMS CUSHIONED

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  • GBP/USD kicks off the new week on a weaker note amid the emergence of some USD buying.
  • September Fed rate cut bets should cap gains for the USD and lend some support to the pair.
  • Diminishing odds for an August BoE rate cut also warrant caution before placing bearish bets.

The GBP/USD pair attracts some selling during the Asian session on Monday and for now, seems to have snapped a three-day winning streak to the 1.3000 neighborhood, or its highest level since July 2023. Spot prices currently trade around the 1.2965 area, down just over 0.15% for the day amid a modest US Dollar (USD) strength, though any meaningful depreciating move seems elusive. 

The attack on US Presidential candidate Donald Trump on Sunday raises the level of political uncertainty and drives some haven flows, allowing the USD to recover a part of Friday's slump to over a three-month low. That said, growing acceptance that the Federal Reserve (Fed) will soon begin its rate-cutting cycle should continue to act as a headwind for the Greenback and lend some support to the GBP/USD pair.


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