GBP/USD remains depressed around mid-1.2800s, holds above multi-week low set on Monday

• GBP/USD edges lower on Tuesday, though the downside remains cushioned.
• A softer risk tone benefits the safe-haven USD and exerts pressure on the pair.
• Traders now look to the key central bank event risk before placing fresh bets.

The GBP/USD pair struggles to capitalize on the overnight goodish recovery from the vicinity of the 1.2800 round figure or a nearly three-week low and attracts some selling during the Asian session on Tuesday. Spot prices currently trade with a negative bias around mid-1.2800s amid a modest US Dollar (USD) strength, though the fundamental backdrop warrants caution for bearish traders. 

A softer risk tone assists the safe-haven US Dollar (USD) to trade with a mild positive bias just below a two-and-half-week high touched on Monday and turns out to be a key factor exerting some pressure on the GBP/USD pair. That said, expectations that the Federal Reserve (Fed) will start lowering borrowing costs in September might act as a headwind for the buck. Furthermore, traders might prefer to wait for more cues about the Fed's rate-cut path before committing to a firm near-term direction. Hence, the focus will remain glued to the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday. 

Investors this week will further take cues from the Bank of England (BoE) policy update on Thursday and important US macro releases scheduled at the start of a new month, including the US Nonfarm Payrolls (NFP) report on Friday. In the meantime, diminishing odds of an interest rate cut by the BoE in August might continue to act as a tailwind for the British Pound (GBP) and contribute to limiting the downside for the GBP/USD pair. This makes it prudent to wait for some follow-through selling and a sustained breakdown through the 1.2800 mark before positioning for an extension of the recent pullback from a one-year peak.