GBP/USD consolidates below mid-1.2900s; downside potential seems limited

• GBP/USD struggles to gain any meaningful traction on Monday amid mixed fundamental cues.
• A bearish USD lends support to the pair, though Friday's dismal UK GDP print caps the upside.
• Traders also seem reluctant to place aggressive bets ahead of the Fed/BoE meetings this week.

The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band, around the 1.2930 region during the Asian session. The fundamental backdrop, however, warrants some caution before positioning for any meaningful corrective pullback for spot prices from a four-month peak, around the 1.2990 area touched last Wednesday.

The US Dollar (USD) languishes near a multi-month low amid worries that US President Donald Trump's tariffs and retaliatory measures from other countries could hurt the US economy. Adding to this, softer then expected US inflation and signs of cooling US labor market might force the Federal Reserve (Fed) to cut interest rates several times this year. This, in turn, keeps the USD bulls on the defensive and acts as a tailwind for the GBP/USD pair. 

The bets for further policy easing by the Fed were reaffirmed by the University of Michigan Surveys released on Friday, which showed that Consumer Sentiment Index plunged to a nearly 2-1/2-year low in March. Moreover, inflation expectations soared amid worries that Trump's aggressive economic policies would boost prices. Apart from this, a generally positive tone around the Asian equity markets is seen undermining the safe-haven Greenback. 

The British Pound (GBP), on the other hand, struggles to lure buyers in the wake of Friday's dismal domestic data, which showed that the UK economy unexpectedly contracted by 0.1% in January. Investors, however, seem convinced that the Bank of England (BoE) will cut rates more slowly than other central banks, including the Fed. This, in turn, favors the GBP bulls and suggests that the path of least resistance for the GBP/USD pair is to the upside. 

Traders now look to the US economic docket, featuring the release of monthly Retail Sales and the Empire State Manufacturing Index, for some impetus later during the North American session. The focus, however, will remain glued to the key central bank event risks - the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday, which will be followed by the BoE policy meeting on Thursday.