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Spot prices trade in the 1.2575-1.2580 range, virtually unchanged for the day during the Asian session, as traders await this week's significant macroeconomic data and the key central bank event risk before placing fresh direction bets.

In the interim, expectations of additional interest rate increases by the Bank of England (BoE) operate as a tailwind for the British Pound and continue to support the GBP/USD pair. In actuality, the markets appear to be persuaded that the BoE will be much more aggressive in its policy tightening to contain persistently high inflation, and they anticipate another 25-bps rate hike on June 22. In response to the uncertainty surrounding the Federal Reserve's (Fed) rate rise path, the US Dollar maintains a position just above its monthly low reached last Thursday.

In fact, the recent dovish language from multiple Fed officials has reaffirmed market expectations that the US central bank will halt its annual rate-hiking cycle in June. However, the markets have priced in the possibility of another 25 bps increase in July. Last week's unexpected rate increases by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) boosted wagers, indicating that the fight against inflation is not yet over and bolstering expectations for additional policy tightening by the US central bank.

Consequently, Wednesday's outcome of the highly anticipated two-day FOMC monetary policy meeting will continue to dominate market sentiment. This week, investors will also face the publication of crucial monthly employment data from the United Kingdom and the latest US consumer inflation data on Tuesday. In the interim, concerns about a global economic downturn could dampen market optimism, bolstering the Greenback's safe-haven status and discouraging bulls from placing fresh wagers on the GBP/USD pair.

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