GBP/USD Range-Bound as USD Firms Amid Fed Risks and Iran Tensions

The GBP/USD pair has been trading in a sideways consolidative price move for the second straight day, hovering around the 1.3630 area during the Asian session on Tuesday. The US Dollar (USD) is showing signs of recovery from its lowest level since May 14 and is acting as a headwind for the currency pair.

The lack of follow-through selling warrants caution for bearish traders, but the market's focus remains glued to the release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday. The Federal Reserve's future policy path will also be under scrutiny, particularly with Fed Chair Kevin Warsh's keynote address at the annual Jackson Hole Symposium on Friday.

Escalating US-Iran tensions are further supporting the safe-haven Greenback and capping the upside for the GBP/USD pair. Treasury Secretary Scott Bessent announced that the US is launching a campaign to isolate Iran from the global economy, warning any country conducting business with Iran risks facing US sanctions.

Traders seem hesitant to place aggressive bullish bets on the USD, opting to wait for more cues about the Fed's future policy path. The GBP/USD pair maintains a bullish near-term bias above the 200-day Simple Moving Average (SMA), but a break above the 1.3660-1.3665 supply zone is needed to validate the constructive outlook.