British Pound pares intraday losses; bulls seem hesitant near 1.3600 on firmer USD

The GBP/USD pair rebounds nearly 50 pips following a bearish gap opening at the start of a new week and climbs back to the 1.3600 mark during the Asian session. However, a modest US Dollar (USD) strength might cap any further gains for spot prices.

US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz amid major disagreements over Iran's nuclear program. This comes on top of renewed hostilities and keeps geopolitical risks in play, which, in turn, assists the safe-haven Greenback to attracts some buyers and should keep a lid on the GBP/USD pair.

Meanwhile, the latest developments trigger a fresh leg up in Crude Oil prices and revive inflationary concerns. Adding to this, Friday's upbeat US Nonfarm Payrolls (NFP) report backs the case for the US Federal Reserve (Fed) to stick to its hawkish stance and remains supportive of elevated US Treasury bond yields. This lends additional support to the USD, and warrants caution for the GBP/USD bulls.

The British Pound (GBP), on the other hand, is underpinned by easing concerns over Prime Minister Keir Starmer’s position, especially after his Labour Party's heavy losses in English local elections and ​parliamentary votes in Scotland and Wales. Apart from this, the Bank of England's (BoE) hawkish signal that rate hikes could be appropriate if inflation remains persistent supports the GBP/USD pair.

Moving ahead, there isn't any relevant market moving economic data due on Monday, leaving spot prices at the mercy of the USD and incoming geopolitical headlines. Nevertheless, the mixed fundamental backdrop, along with the recent range-bound price action witnessed over the past week or so, makes it prudent to wait for strong follow-through buying before positioning for any further gains.