• GBP/USD staged a modest bounce from the 1.3200 neighbourhood, though lacked follow-through.
• Hawkish Fed expectations underpinned the greenback and capped gains amid Brexit uncertainties.
• Bears might wait for a sustained break below the 1.3200 mark before positioning for further losses.

The GBP/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, around the 1.3230-35 region through the Asian session.

The pair managed to defend the 1.3200 mark and attracted some buying on the first day of a new week, though the attempted recovery lacked any follow-through amid renewed US dollar strength. As investors' looked past Friday's mixed US NFP report, the USD was back in demand and remained well supported by the prospects for a faster policy tightening by the Fed.

Investors seem convinced that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. In fact, the money markets indicate a high probability of the Fed liftoff by May 2022, which, in turn, acted as a tailwind for the greenback. This, along with Brexit-related uncertainties, capped the upside for the GBP/USD pair.

Meanwhile, the global risk sentiment stabilized on the back of preliminary observations from South Africa, suggesting that Omicron patients had relatively mild symptoms. This was evident from a generally positive tone around the equity markets, which might hold back the USD bulls from placing fresh bullish bets and limit the downside for the GBP/USD pair.

Hence, it will be prudent to wait for a sustained break below the 1.3200 mark before positioning for a further near-term depreciating move for the GBP/USD pair. The UK economic docket features the only release of Construction PMI, while there isn't any major market-moving data due from the US. This further warrants some caution for aggressive bearish traders.

That said, a scheduled speech by the Bank of England Deputy Governor Ben Broadbent might influence the British pound and provide some impetus to the GBP/USD pair. This, along with the broader market risk sentiment, will be looked upon for some short-term trading opportunities around the major.

Technical levels to watch