GBP/USD lacks firm intraday direction, flat lines around mid-1.3600s

• GBP/USD struggles to gain any meaningful traction amid a combination of diverging forces.
• BoE rate cut bets weigh on the GBP and largely offset the underlying USD bearish sentiment.
• The market focus now shifts to the release of the FOMC meeting minutes on Wednesday.

The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow band around mid-1.3600s during the Asian session amid mixed fundamental cues.

The British Pound (GBP) drew some support last week from Prime Minister Keir Starmer's announcement that Chancellor Rachel Reeves would remain in office for the foreseeable future. However, the growing possibility of a Bank of England (BoE) rate cut as early as August acts as a headwind for the GBP/USD pair. In fact, BoE Governor Andrew Bailey stated that interest rates are moving downwards, while MPC member Alan Taylor called for faster rate cuts amid the risk of a hard landing for the UK economy.

The downside for the GBP/USD pair, however, remains cushioned in the wake of the underlying bearish sentiment surrounding the US Dollar (USD). Investors remain worried that US President Donald Trump's massive tax-cut and spending bill would explode the federal deficit and worsen America's long-term debt problems. This, along with firming expectations that the Federal Reserve (Fed) will resume its rate-cutting cycle in the near future keeps the USD pinned near its lowest level since February 2021.

Hence, investors will closely scrutinize FOMC meeting minutes, due on Wednesday, for cues about the Fed's rate-cut path, which will drive the USD demand and provide some meaningful impetus to the GBP/USD pair. In the meantime, spot prices seem more likely to extend the sideways consolidative price move in the absence of any relevant market-moving economic releases on Monday, either from the UK or the US.