GBP/USD remains capped under 1.3000, focus on Fedspeak

• GBP/USD edges lower to 1.2980 in Tuesday’s early Asian session.
• Dovish comments from Fed officials might weigh on the USD and cap the pair’s downside. 
• Fed’s Bostic and Barr are set to speak later on Tuesday.

The GBP/USD pair weakens near 1.2980, snapping the three-day winning streak during the early European session on Tuesday. The modest recovery of the Greenback drags the major pair lower. In the absence of top-tier data releases from the UK later this week, the USD price dynamic will be the main driver for the GBP/USD. All eyes will be on the Federal Reserve (Fed) Chair Jerome Powell's speech on Friday. 

The UK inflation and employment reports last week supported the Bank of England (BoE) to keep the interest rate steady at 5.0% at the upcoming September meeting. IBOSS chief economist, Rupert Thompson, noted, “The BOE is most likely to leave rates unchanged at their next meeting in September, with the next cut having to wait until November.” The expectation of more rate cuts by the BoE might weigh on the Pound Sterling (GBP) in the near term. 

However, the upside of the US Dollar (USD) might be capped amid the dovish stance of the Fed officials. Minneapolis Fed President Neel Kashkari stated on Monday that he would be open to cutting US interest rates in September because of the rising possibility that the labor market weakens too much. 

Meanwhile, Chicago Fed President Austan Goolsbee said on Sunday that the US economy does not show signs of overheating, therefore, Fed officials should be vigilant about keeping restrictive policy in place longer than necessary. According to the CME FedWatch Tool, traders have priced in around 77% odds of a 25 basis points (bps) Fed rate cut in its September meeting. Later on Tuesday, investors will take more cues from the Fed’s Raphael Bostic and Michael Barr speeches. Any dovish comments of Fed officials could undermine the USD and help limit losses for the GBP/USD pair.