GBP/USD bears flirt with 100-day SMA, retain control near the lowest level since mid-May

• GBP/USD struggles near its lowest level since mid-May touched on Friday.
• Bets for a rate cut by the BoE in August continue to undermine the GBP.
• The USD climbs to its highest level since May 9 and also exerts pressure.

The GBP/USD pair kicks off the new week on a subdued note and remains well within the striking distance of its lowest level since mid-May touched on Friday. Spot prices currently trade around the 1.2635 area, with bears awaiting a sustained break and acceptance below the 100-day Simple Moving Average (SMA) before positioning for an extension of the recent pullback from a multi-month peak.

The British Pound (GBP) continues to be undermined by the Bank of England's (BoE) dovish pause last week, which lifted bets for an interest rate cut at the August monetary policy meeting. Adding to this, the flash UK PMIs released on Friday showed that private sector business activity expanded in June at its slowest rate since last November. This, along with some follow-through US Dollar (USD) buying, turns out to be another factor weighing on the GBP/USD pair. 

Against the backdrop of the Federal Reserve's (Fed) hawkish surprise earlier this month, forecasting only one rate cut this year, data released on Friday showed the US business activity crept up to a 26-month high in June. Apart from this, a cautious market mood lifts the safe-haven buck to its highest level since May 9 and further contributes to the offered tone surrounding the GBP/USD pair, though the lack of follow-through selling warrants caution for bearish traders.

Market participants are still pricing in the possibility of two interest rate cuts by the Fed in 2024 amid signs of easing inflationary pressures in the US. This might keep a lid on any further appreciating move for the Greenback and help limit the downside for the GBP/USD pair. Traders might also refrain from placing aggressive directional bets ahead of the UK general election on July 4 and in the absence of any relevant market-moving macroeconomic released on Monday.