GBP/USD Consolidates Near 1.3740 Close to Multi-Year High Amid Bearish US Dollar

GBP/USD Holds Near 1.3740 on Continued USD Selling and Fed Rate Cut Bets

The GBP/USD currency pair edged higher in Tuesday’s Asian session, consolidating near the 1.3740 level—close to last week’s October 2021 high—as the US Dollar remains under pressure.

The USD Index (DXY) slipped to its lowest since February 2022 amid growing expectations for earlier Federal Reserve (Fed) rate cuts. Market pricing currently suggests a lower likelihood of a July cut but assigns a 74% probability for September.

US economic data fueled the bearish USD sentiment, notably the unexpected decline in May’s consumer spending reported in the Personal Consumption Expenditures (PCE) report last Friday.

Adding to the pressure on the Greenback are concerns over the US fiscal outlook. The Senate narrowly advanced a vote on President Trump’s expansive "One Big Beautiful Bill," which could increase the federal deficit by approximately $3.3 trillion over the next decade.

Alongside these factors, a broad risk-on environment supports the bearish USD stance, helping maintain upward momentum for GBP/USD as traders await key speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powell for further cues.

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