GBP/USD lacks firm near-term direction, remains confined in a range around mid-1.2600s

• GBP/USD continues with its struggle to gain any meaningful traction on Tuesday.
• Bets for a BoE rate cut in August act as a headwind amid modest USD strength.
• Traders also prefer to wait on the sidelines ahead of the UK election on Thursday. 

The GBP/USD pair extends its sideways consolidative price move during the Asian session on Tuesday and remains confined in a familiar range held over the past two weeks or so. Spot prices currently trade around the 1.2655-1.2645 confluence region – comprising 50-day and 100-day Simple Moving Averages (SMAs) – amid the anxiety surrounding the upcoming UK general elections on Thursday.

In the meantime, the Bank of England's (BoE) dovish pause in June, which lifted bets for a rate cut at the August monetary policy meeting, continues to undermine the British Pound (GBP). The US Dollar (USD), on the other hand, builds on the overnight solid bounce from a multi-day low and further seems to act as a headwind for the GBP/USD pair. The yield on the benchmark 10-year government bond shot to its highest level in a month on Monday amid concerns that the imposition of aggressive tariffs by the Trump administration could fuel inflation and trigger higher interest rates.

Apart from this, This, along with a softer tone around the US equity futures, lends some support to the safe-haven Greenback. That said, growing acceptance that the Federal Reserve (Fed) will begin its rate-cutting cycle in September keeps a lid on any further upside for the US bond yields. The expectations were reaffirmed by the US ISM PMI on Monday, which showed the US manufacturing sector contracted for the third straight month in June. This, along with signs that inflation in the US is subsiding, should allow the US central bank to start lowering borrowing costs. 

Traders might also prefer to wait for more cues about the Fed's rate-cut path before positioning for the next leg of a directional move. Hence, the focus will remain glued to Fed Chair Jerome Powell's speech later this Tuesday and FOMC meeting minutes on Wednesday. Apart from this, the US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, due for release on Friday, will play a key role in influencing the near-term USD price dynamics.