GBP/USD has started the new week on a weaker note, giving back some of Friday’s modest rebound from around 1.3200, or three-week lows. The spot price traded in the 1.3280-1.3275 area during the Asian session, down 0.20% on the day as the US dollar (USD) generally strengthened.

The United States announced a trade deal with China on Sunday following progress in high-stakes trade talks in Switzerland. This in turn helped ease market concerns about a U.S. recession. Additionally, the Federal Reserve’s (Fed) hawkish pause earlier this month pushed the dollar to a more than one-month high, which further pressured GBP/USD.

Meanwhile, the United States and Britain signed a limited trade deal last Thursday. Additionally, the Bank of England (BoE) said interest rates will remain restrictive until inflation risks abate, a cautious tone that could prevent traders from making aggressive bearish bets on the British pound (GBP) and limit any meaningful depreciation moves in GBP/USD.

Even from a technical perspective, the range-bound price action of the past three weeks or so warrants caution in positioning for a clear direction in the near term. Investors may also choose to wait for speeches from members of the Bank of England's Monetary Policy Committee and influential Federal Reserve officials. Investors will be looking for clues about the future policy outlook, which in turn will provide fresh impetus for GBP/USD.