GBP/USD trades with negative bias above 1.3500 ahead of BoE Monetary Policy Report Hearings

• GBP/USD retreats from a multi-day peak amid the emergence of some USD buying on Tuesday.
• Dovish Fed expectations and US fiscal concerns should keep a lid on any meaningful USD gains.
• Traders now look to BoE Monetary Policy Report Hearings ahead of US JOLTS Job Openings data.

The GBP/USD pair attracts some sellers during the Asian session on Tuesday and erodes a part of the overnight strong move up to the 1.3560 area, or a multi-day peak. Spot prices drop to the 1.3515 area, or a fresh daily low in the last hour amid a modest US Dollar (USD) uptick, though the fundamental backdrop warrants some caution for bearish traders.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, rebounds from a six-week trough touched on Monday and turns out to be a key factor exerting downward pressure on the GBP/USD pair. Any meaningful USD appreciation, however, seems elusive in the wake of the growing acceptance that the Federal Reserve (Fed) will lower borrowing costs further this year amid signs of easing inflationary pressures.

Moreover, concerns about the worsening US fiscal situation and renewed US-China trade tensions should contribute to capping the upside for the Greenback. The British Pound (GBP), on the other hand, might continue to draw support from expectations that the Bank of England (BoE) would pause at its next meeting on June 18 and take its time before cutting interest rates further. This could further help limit losses for the GBP/USD pair.

Traders might also opt to wait for the BoE Monetary Policy Report Hearings before Parliament. Investors will closely scrutinize comments from  BoE Governor Andrew Bailey and other Monetary Policy Committee (MPC) members for cues about the policy outlook, which, in turn, will drive the GBP. Later during the early North American session, the US JOLTS Job Openings data and Fedspeaks might influence the USD and the GBP/USD pair.