GBP/USD struggles to gain any meaningful traction, stuck in a range below 1.3500 mark

• GBP/USD lacked any firm directional bias and oscillated in a range below the 1.3500 mark.
• The UK political turmoil acted as a headwind and capped gains amid modest USD strength.
• The downside remains limited as investors seemed reluctant ahead of the FOMC decision.

The GBP/USD pair seesawed between tepid gains/minor losses through the first half of the European session and remained confined in a range below the key 1.3500 psychological mark.

A combination of negative factors failed to assist the GBP/USD pair to gain any traction or capitalize on the overnight recovery move from a three-week low, around the 1.3440 region. Growing demand for UK Prime Minister Boris Johnson's resignation over a series of lockdown parties in Downing Street acted as a headwind for the British pound. Apart from this, modest US dollar strength capped the upside for the major.

The USD held steady near a two-week high and continued drawing support from expectations that the Fed will tighten its monetary policy at a faster pace than expected. In fact, the markets seem convinced about an eventual Fed lift-off in March and have been pricing in a total of four rate hikes in 2022. Apart from this, a goodish rebound in the US Treasury bond yields turned out to be another factor that underpinned the buck.

That said, a generally positive tone around the European equity markets held back traders from placing aggressive bullish bets around the safe-haven greenback. This, along with rising bets for additional interest rate hikes by the Bank of England, helped limit any deeper losses for the GBP/USD pair. Investors also seemed reluctant and preferred to wait for the outcome of a two-day FOMC monetary policy meeting.

In the absence of any major market-moving economic data from the UK, investors might wait for a fresh catalyst before positioning for a firm intraday direction. Later during the early North American session, traders might take cues from the release of the Conference Board's US Consumer Confidence Index. The data will influence the USD price dynamics and provide some short-term trading impetus to the GBP/USD pair.

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