GBP/USD holds steady above mid-1.3500s ahead of UK CPI, Fed/BoE policy meetings

• GBP/USD consolidates in a narrow range on Tuesday amid mixed fundamental cues.

• BoE rate cut bets undermine the GBP and cap the upside amid a modest USD uptick.

• Dovish Fed expectations keep the USD bulls on the defensive and support the major.

• Traders also seem reluctant ahead of the crucial Fed/BoE policy meetings this week.

The GBP/USD pair lacks any firm intraday directional bias and oscillates in a narrow trading band, above mid-1.3500s during the Asian session on Tuesday. Spot prices, however, remain close to a three-year top touched last Friday as traders opt to wait for this week's key data/central bank event risks before positioning for the next leg of a directional move.

The UK consumer inflation figures are due for release on Wednesday ahead of the crucial Bank of England (BoE) policy meeting on Thursday, which should influence the British Pound (GBP). Moreover, the US Federal Reserve (Fed) interest rate decision on Wednesday will drive the US Dollar (USD) in the near term and provide some meaningful impetus to the GBP/USD pair.

In the meantime, bets that the BoE will cut interest rates more aggressively than anticipated – bolstered by data showing that the UK economy contracted more than expected in April – act as a headwind for the GBP. Adding to this, rising geopolitical tensions in the Middle East underpin the Greenback's relative safe-haven status and contribute to capping the GBP/USD pair.

Meanwhile, the USD bulls seem reluctant to place aggressive bets amid the growing acceptance that the Fed will resume its rate-cutting cycle in September. Apart from this, persistent trade-related uncertainties and US fiscal concerns warrant some caution before positioning for any meaningful USD appreciation. This, in turn, is seen lending some support to the GBP/USD pair.