GBP/USD posts modest gains above 1.3450, concerns over UK's fiscal outlook might cap its upside

• GBP/USD rebounds to near 1.3465 in Monday's early Asian session.
• Fresh concerns over the UK's fiscal outlook could weigh on the Pound Sterling. 
• Fed delivered a rate cut last week and signaled that two more reductions are expected by the end of the year.

The GBP/USD pair recovers some lost ground to around 1.3465, snapping the three-day losing streak during the early Asian session on Monday. However, the potential upside for the Pound Sterling (GBP) might be limited amid concerns that UK Finance Minister Rachel Reeves may not be able to keep her budget under control. The Bank of England (BoE) Chief Economist Huw Pill is set to speak later on Monday. 

The latest public finance figures showed that public sector net borrowing hit £18 billion, the highest for the month in five years. Economists expected government borrowing to come in significantly lower at £12.8 billion. Analysts believe that the move threatens to worsen the debt burden and intensify fiscal risks, which might exert some selling pressure on the Cable. 

The BoE voted to keep interest rates on hold at 4.0% on Thursday amid an uncertain growth outlook and a weaker jobs market. The decision came after the UK central bank last reduced the key interest rate by 25 basis points (bps) in August. The BOE reiterated that a "gradual and careful further withdrawal of monetary policy restraint remains appropriate." This, in turn, might help limit the major pair's losses in the near term. 

On the USD's front, the US Federal Reserve (Fed) last week approved a widely anticipated rate cut and signaled that two more reductions are on the way before the end of the year. However, Fed Chair Jerome Powell emphasized the rate cut as a "risk-management cut" and stated that future decisions would be made "meeting by meeting," suggesting a less aggressive easing cycle than some investors anticipated. 

Traders will take more cues from the Fedspeak later on Monday. The remarks from Fed officials might offer some hints about the US interest rate outlook. Any dovish comments from policymakers could weigh on the Greenback and create a tailwind for the GBP/USD pair.