• GBP/USD struggles to gain any meaningful traction and oscillates in a narrow trading range.
• The risk-on impulse is seen undermining the safe-haven USD and lending support to the major.
• The divergent Fed-BoE policy outlook should keep a lid on any meaningful upside for the pair.

The GBP/USD pair finds some support near the 100-hour Simple Moving Average (SMA) during the Asian session on Monday, albeit struggles to attract any meaningful buying and oscillates in a range just below the 1.2200 mark.

A small gap higher opening for the US equity futures holds back traders from placing fresh bullish bets around the safe-haven US Dollar (USD), which, in turn, is seen acting as a tailwind for the GBP/USD pair. The global risk sentiment gets a goodish lift in reaction to the encouraging weekend news on China's economy and the funding for the US government. The official Chinese PMIs showed that business activity in the manufacturing sector recorded growth for the first time in six months and the services sector remained in expansion territory during September. Adding to this, the US Congress approved the stopgap funding bill to avert a government shutdown for another 45 days and further boosted investors' confidence.

The US macro data released on Friday, meanwhile, does little to change the view that the Federal Reserve (Fed) will stick to its hawkish stance and help limit the downside for the USD, capping gains for the GBP/USD pair. The US PCE Price Index rose in line with consensus estimates, to 3.5% over the past twelve months through August from the the previous month's upwardly revised reading of 3.4%. that said, the annual Core PCE Price Index – the Fed's preferred gauge of inflation – eased from the 4.3% (revised from 4.2%) increase recorded in July and dipped below 4% for the first time in over two years. Inflation, however, remains elevated above the 2% target and supports prospects for further tightening by the Fed.

The outlook remains supportive of a fresh leg up in the US Treasury bond yields and favours the USD bulls. Apart from this, the fact that the Bank of England (BoE) surprisingly paused its rate-hiking cycle earlier this month and provided little hints of its intention to raise rates any further contributes to keeping a lid on the GBP/USD pair. This makes it prudent to wait for strong follow-through buying before positioning for any meaningful recovery from the vicinity of the 1.2100 mark, or the lowest level since March touched last week. Market participants now look to the release of the US ISM Manufacturing PMI for some impetus ahead of Fed Chair Jerome Powell's scheduled speech later during the early North American session