GBP/USD bulls eyeing a move beyond 1.2600 handle

   •  Brexit uncertainties continue to dent sentiment surrounding the British Pound.
   •  Uncertainty over the Fed’s monetary policy kept the USD bulls on the defensive.

The GBP/USD pair extended its consolidative price action and remained confined in a narrow trading band, just below the 1.2600 handle.

A combination of diverging forces failed to provide any meaningful impetus and led to a subdued/range-bound price action through the early European session at the start of a new trading week.

With the latest optimism over the UK PM Theresa May's victory in the leadership challenge fading rather quickly, concerns over May's ability to get her Brexit deal through the parliament kept the GBP bulls on the defensive. 

However, uncertainty over the Fed's rate hike path in 2019 kept a lid on any follow-through US Dollar up-move, further beyond 1-1/2 year tops set on Friday, and helped limit any meaningful downside. 

The Fed is widely expected to raise interest rates by 25bps at its upcoming meeting, starting this Tuesday, but the recent comments by various Fed officials, including the Fed Chair Jerome Powell, have been interpreted as dovish.

Hence, the key focus will be on the Fed's latest economic projections, especially dot-plot, which will provide a fresh insight over the central bank's monetary policy outlook and eventually guide the greenback in the near-term.

In the meantime, any incoming Brexit-related headlines might continue to influence sentiment surrounding the Sterling and provide some short-term trading opportunities amid absent relevant market moving economic releases, either from the UK or from the US.

Technical levels to watch

Any meaningful up-move is likely to confront some fresh supply near the 1.2615-20 region, above which a bout of short-covering could lift the pair further towards 200-hour SMA, currently near mid-1.2600s. On the flip side, the 1.2565 level now seems to have emerged as an immediate support, which if broken might turn the pair vulnerable to slide back towards challenging the key 1.2500 psychological mark.