Ella 
During the Asian session on Tuesday, the GBP/USD trend was moderate, but there was a lack of follow-up buying orders, and it still encountered obstacles at the mid-range of 1.2600, the overnight high. Meanwhile, the fundamental backdrop favors bearish traders, with caution needed before investors place positions for GBP/USD to extend its recent rally from around 1.2475, the five-week low hit on Friday.
Bank of England (BOE) Governor Andrew Bailey said last week that expectations for an interest rate cut this year were not unreasonable. Previously, two Bank of England policymakers had voted in favor of raising interest rates, but then the Bank of England changed its stance and stabilized borrowing costs at 5.25%, which may continue to suppress the pound (GBP). On the other hand, amid the optimistic outlook for the U.S. economy, the U.S. dollar stopped its corrective pullback from near the monthly high the day before. This further limits the upside for GBP/USD.
In addition, many Fed officials expressed concerns about continued high inflation and stronger-than-expected U.S. macro data. In fact, Atlanta Fed President Raphael Bostic expects the U.S. economy and inflation to gradually slow, and expects only one interest rate cut this year. Separately, Chicago Fed President Austan Goolsbee said the Fed needs to see progress in dealing with inflation and strike a balance in its dual mandate. Meanwhile, Fed Governor Lisa Cook said there are risks in easing policy too much too soon and too late as the road to combating deflation is bumpy.
However, the Federal Reserve said last week that it will still cut interest rates by 75 basis points this year, which is negative for U.S. bond yields. This, coupled with the overall bullish tone in the stock market, could inhibit traders from placing aggressive bullish bets on the safe-haven US dollar and provide some support for GBP/USD. Focus turned to U.S. economic data – including durable goods orders, the Conference Board Consumer Confidence Index and the Richmond Manufacturing Index – for fresh trading momentum.
