• GBP/USD attracted some dip-buying and reversed an intraday slide to sub-1.3000 levels.
• The USD consolidated its recent gains to a near two-year high and extended some support.
• The Fed’s hawkish outlook acted as a tailwind for the USD and capped gains for the major.

The GBP/USD pair quickly reversed an early European session dip back closer to the YTD low and was last seen trading near the top end of its daily range, around the 1.3025-1.3030 region.

The pair once again showed some resilience below the 1.3000 psychological mark and attracted some dip-buying on Monday, though the attempted recovery lacked follow-through. The incumbent French President Emmanuel Macron's lead in the first round of the presidential election offered some support to the shared currency. This forced the US dollar to consolidate its recent strong gains to the highest level since May 2020, which, in turn, acted as a tailwind for the GBP/USD pair.

That said, a combination of factors helped limit any meaningful USD corrective slide and kept a lid on any meaningful gains for spot prices, at least for the time being. Investors seem convinced that the Fed would tighten its monetary policy at a faster pace to curb soaring inflation. Moreover, worries that rising commodity prices would put upward pressure on already high consumer prices pushed the US Treasury bond yields to a fresh multi-year peak and should underpin the buck.

Hence, the market focus will remain glued to the latest US consumer inflation figures, due for release on Tuesday. In the meantime, the US bond yields will continue to play a key role in influencing the USD price dynamics. Traders will take cues from developments surrounding the Russia-Ukraine saga, which will drive the market risk sentiment and the safe-haven demand. This, in turn, should provide some impetus to the GBP/USD pair amid absent relevant market moving economic releases.

Technical levels to watch