• GBP/USD struggles for a firm near-term direction and oscillates in a familiar trading range.
• Reduced bets for an early BoE rate cut underpin the GBP and lend some support to the pair.
• The uncertainty over the Fed’s rate-cut path holds back traders from placing directional bets.

The GBP/USD pair ticks higher following an Asian session dip on Monday, albeit lacks follow-through and remains confined in a familiar range held over the past two weeks or so. Spot prices currently trade around the 1.2700 mark, nearly unchanged for the day as traders await a fresh catalyst before positioning for a firm near-term trajectory.

Hence, the focus remains glued to the outcome of the highly-anticipated two-day FOMC monetary policy meeting starting on Tuesday amid the uncertainty over the timing of the first interest rate cut. Data released on Friday showed that the US inflation rose modestly in December and reaffirmed expectations that the Federal Reserve will cut rates by the middle of 2024. That said, stronger growth in Personal Incomes fueled a surge in spending, which, along with the upbeat US Q4 GDP print, suggested that the economy is still in good shape. This, in turn, raises doubts over the possibility of more aggressive policy easing by the Federal Reserve (Fed), which acts as a tailwind for the US Dollar (USD) and should cap the GBP/USD pair.

Apart from this, a generally weaker tone around the equity markets assists the safe-haven buck to stand tall near its highest level since December 13 touched last week. That said, hopes for a soft landing for the US economy keep a lid on the US Treasury bond yields and the USD. Apart from this, expectations that a slight pickup in Britain's stagnant economy could delay the start of the Bank of England's (BoE) policy easing cycle could lend support to the British Pound (GBP) and continue lending support to the GBP/USD pair. The recent range-bound price action, however, points to indecision among traders over the next leg of a directional move for spot prices and warrants some caution for aggressive traders.

Moving ahead, there isn't any relevant market-moving economic data due for release on Monday, either from the UK or the US, leaving the GBP/USD pair at the mercy of the USD price dynamics. Investors, meanwhile, might prefer to wait on the sidelines ahead of this week's key central bank event risk and important US macro data scheduled at the start of a new month, including the Nonfarm Payrolls on Friday. Hence, it will be prudent to wait for a sustained breakout through the short-term trading band before positioning for a firm near-term direction.