GBP/USD steadily climbs above mid-1.3200s amid a softer USD; bulls lack conviction

• GBP/USD recovers slightly from over a one-month low as the USD bulls pause for a breather.
• The Fed's hawkish outlook should limit any USD corrective fall and cap gains for spot prices.
• Bets for a BoE rate cut in August might undermine the GBP and act as a headwind for the pair.

The GBP/USD pair attracts some buyers during the Asian session on Thursday and reverses a part of the previous day's decline to the lowest level since May 13. Spot prices currently trade just above mid-1.3200s, though the fundamental backdrop warrants some caution before positioning for any meaningful recovery.

The US Dollar (USD) enters a bullish consolidation phase following Wednesday's post-FOMC spike to a two-month peak and is seen as a key factor acting as a tailwind for the GBP/USD pair. Any meaningful USD depreciation, however, seems elusive in the wake of the Federal Reserve's (Fed) hawkish tilt. In fact, Fed Chair Jerome Powell, while speaking to reporters during the post-meeting press conference, showed no preference for cutting rates at the next meeting in September.

This, along with he upbeat US macro data released on Wednesday, should act as a tailwind for the USD and cap the GBP/USD pair. Automatic Data Processing reported that private payrolls in the US rose by 104,000 jobs in July, following a revised 23,000 fall recorded in the previous month. Moreover, the Advanced US Gross Domestic Product (GDP) report showed that the economy expanded at a 3.0% annualized pace during the second quarter after contracting by 0.5% in the first quarter.

Adding to this, the uncertainty over the extension of the US-China trade truce could limit deeper losses for the safe-haven buck. The British Pound (GBP), on the other hand, might struggle to lure buyers amid the growing acceptance that the Bank of England (BoE) will cut interest rates by 25 basis points at the upcoming meeting on August 7. This might further contribute to capping the GBP/USD pair and warrants caution before placing aggressive bullish bets or positioning for further gains.

Even from a technical perspective, the overnight breakdown through the 100-day Simple Moving Average (SMA) was seen as a key trigger for bearish traders. Investors now look forward to the release of the US Personal Consumption Expenditure (PCE) Price Index, due later during the North American session. The Fed's preferred inflation gauge will play a key role in influencing the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.