• GBP/USD kicks off the new week on a softer note as less dovish Fed expectations underpin the USD.
• The UK budget uncertainty and BoE rate cut bets contribute to the GBP’s relative underperformance.
• Traders this week will look forward to important US macro releases for some meaningful impetus.

The GBP/USD pair struggles to capitalize on its gains registered over the past two days and kicks off the new week on a softer note amid a broadly firmer US Dollar (USD). Spot prices, however, manage to hold comfortably above last week's swing low and currently trade just below the 1.3100 mark, down less than 0.15% for the day.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, sits near its highest level since late May amid less dovish Federal Reserve (Fed) expectations. In fact, chances for another rate cut by the US central bank in December reduced further following the delayed release of mostly upbeat US Nonfarm Payrolls (NFP) report for September. This offset concerns about the weakening economic momentum on the back of the longest-ever US government shutdown and continues to underpin the USD, and weighs on the GBP/USD pair.

The British Pound (GBP), on the other hand, continues with its relative underperformance amid the uncertainty surrounding the upcoming UK budget and rising bets for an interest rate cut by the Bank of England (BoE) next month. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. Traders, however, seem reluctant to place aggressive directional bets and opt to wait for the UK Chancellor Rachel Reeves’ Autumn Budget on Wednesday. Apart from this, important US macro data will play a key role in providing a fresh impetus.

A rather busy US economic docket this week features the delayed release of the Producer Price Index (PPI) and Retail Sales data, along with the Conference Board's Consumer Confidence Index on Tuesday. This will be followed by the preliminary Q3 GDP print and the Personal Consumption Expenditure (PCE) Price Index report on Wednesday. The latter would offer more cues about the Fed's rate-cut path and influence the near-term USD price dynamics, which, in turn, should help in determining the next leg of a directional move for the GBP/USD pair.