GBP/USD climbs closer to mid-1.3400s as trade optimism undermines the safe-haven USD

• GBP/USD kicks off the new week on a positive note, though it lacks follow-through buying.

• The US-EU trade deal boosts the risk sentiment, undermining the USD and lending support.

• Traders seem reluctant ahead of this week’s central bank event and data risks from the US.

The GBP/USD pair attracts some buyers during the Asian session on Monday and, for now, seems to have snapped a two-day losing streak to the 1.3400 neighborhood. Spot prices climb back closer to mid-1.3400s in the last hour, though the uptick lacks bullish conviction as traders seem reluctant ahead of this week's key central bank event and data risks.

The US Federal Reserve (Fed) is scheduled to announce its policy decision at the end of a two-day meeting on Wednesday, and investors will look for cues about the future rate-cut path. Apart from this, the Advance US Q2 GDP print, the US Personal Consumption Expenditure (PCE) Price Index, and the closely-watched US Nonfarm Payrolls (NFP) report will drive the US Dollar (USD) and provide a fresh impetus to the GBP/USD pair.

In the meantime, the latest optimism fueled by a trade deal between the US and the European Union (EU) triggers a fresh wave of the global risk-on trade. This, in turn, is seen undermining the safe-haven USD and acting as a tailwind for the GBP/USD pair. However, the growing acceptance that the Bank of England (BoE) could cut interest rates in August might hold back traders from placing aggressive bullish bets around the British Pound (GBP).

In the absence of any relevant market-moving economic releases on Monday, either from the UK or the US, the aforementioned fundamental backdrop warrants some caution for the GBP/USD bulls. This, in turn, makes it prudent to wait for strong follow-through buying before positioning for any further appreciating move. Nevertheless, spot prices manage to hold above the monthly swing low and remain at the mercy of the USD price dynamics.