GBP/USD consolidates above 1.3400 as softer USD offsets dovish BoE expectations

• GBP/USD struggles to gain any meaningful traction amid a mixed fundamental backdrop.

• Fed rate cut bets and economic risks undermine the USD, lending support to spot prices.

• Dovish BoE expectations and fiscal concerns act as a headwind for the GBP and the pair.

The GBP/USD pair kicks off the new week on a subdued note following Friday's good two-way price swings and holds steady above the 1.3400 round figure during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution before positioning for an extension of the recent goodish recovery from the 1.3250-1.3245 region, or the lowest level since early August, touched last Tuesday.

The US Dollar (USD) struggles to capitalize on its gains registered on Friday amid expectations of further interest rate cuts by the US Federal Reserve (Fed) this year. Apart from this, economic risks stemming from a prolonged US government shutdown, global trade frictions, and signs of weakness in the US economy keep the USD bulls on the defensive. This, in turn, is seen as a key factor offering some support to the GBP/USD pair.

Meanwhile, disappointing UK employment details released last week fueled speculations that the Bank of England (BoE) could continue cutting rates gradually. Adding to this, worries about the UK’s fiscal outlook ahead of the crucial Autumn budget in November act as a headwind for the British Pound (GBP) and the GBP/USD pair. This, in turn, warrants some caution for bullish traders and positioning for any further gains.

Even from a technical perspective, Friday's failure near the 50% Fibonacci retracement level of the September-October downfall makes it prudent to wait for strong follow-through buying in order to confirm a near-term bottom for spot prices. 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.