GBP/USD consolidates around mid-1.3500s ahead of this week’s key data/central bank event risks

• GBP/USD kicks off the new week on a softer tone amid rising geopolitical tensions.

• The USD struggles to gain any meaningful traction and lends support to the major.

• Traders also seem reluctant ahead of the UK CPI and Fed/BoE meetings this week.

The GBP/USD pair remains on the defensive below a three-year top touched on Friday, though it lacks bearish conviction and oscillates in a narrow band around mid-1.3500s during the Asian session. Traders seem reluctant and opt to wait for this week's key data/central bank event risks before positioning for the next leg of a directional move for spot prices.

The latest UK consumer inflation figures will be released on Wednesday ahead of the Bank of England (BoE) policy meeting on Thursday, which will play a key role in influencing the British Pound (GBP). Furthermore, the US Federal Reserve (Fed) is scheduled to announce its policy decision on Wednesday, which will drive the US Dollar (USD) and provide some meaningful impetus to the GBP/USD pair.

In the meantime, Friday's weaker UK GDP print, showing that the economy contracted more than expected, by 0.3% in April, lifted expectations that the BoE will cut interest rates more aggressively than anticipated. The USD, on the other hand, draws some support from the global flight to safety, fueled by rising geopolitical tensions in the Middle East, and contributes to capping the upside for the GBP/USD pair.

However, the growing acceptance that the US central bank will also resume its rate-cutting cycle in September, amid signs of easing inflation in the US, holds back the USD bulls from placing aggressive bets. Moreover, a generally positive risk tone acts as a headwind for the safe-haven buck and lends some support to the GBP/USD pair, warranting some caution before confirming that spot prices have topped out.