Ella 
GBP/USD rebounded strongly overnight from around the 1.2800 mark, a near three-week low, but GBP/USD struggled to profit from the move, attracting some selling during the Asian session on Tuesday. GBP/USD is currently trading down around 1.2800 on the back of modest strength in the US dollar (USD), but the fundamental environment warrants caution among bearish traders.
Weak risk sentiment has boosted the safe-haven dollar to maintain a moderate upward trend, just below the two-and-a-half-week high hit on Monday, and became a key factor that put some pressure on GBP/USD. That said, expectations that the Federal Reserve will start cutting borrowing costs in September could weigh on GBP/USD. Additionally, traders may prefer to wait for more clues on the path of the Fed’s rate cuts before determining its near-term direction. Therefore, the outcome of the two-day Federal Reserve monetary policy meeting to be held on Wednesday will remain the focus of market attention.
Investors this week will also pay further attention to the Bank of England’s policy update on Thursday and important U.S. macro data scheduled to be released at the beginning of the month, including Friday’s U.S. non-farm payrolls (NFP) report. Meanwhile, the chances of a rate cut by the Bank of England in August have diminished, which could continue to boost the pound and help limit the downside for the GBP/USD pair. Therefore, it would be prudent to wait for some follow-through selling and a sustained move below the 1.2800 mark before taking a position on the recent pullback from one-year highs.
