GBP/USD struggles for direction, stuck in a range below mid-1.3300s

• GBP/USD witnessed a subdued/range-bound price action on the first day of a new week.
• Renewed USD buying acted as a headwind for the major amid Brexit-related uncertainties.
• Expectations for an imminent BoE rate hike extended some support and limit the downside.

The GBP/USD pair lacked any firm directional bias on Monday and seesawed between tepid gains/minor losses, just below mid-1.3300s heading into the European session.

The pair struggled to capitalize on Friday's goodish recovery from the 1.3280-75 region, or the lowest level since December 2020 and witnessed a subdued price action on the first day of a new week. The global risk sentiment stabilized a bit as investors preferred to wait and see if the new Omicron coronavirus variant would eventually derail the economic recovery. The risk-on flow led to a solid rebound in the US Treasury bond yields, which helped revive the US dollar demand and acted as a headwind for the GBP/USD pair.

On the other hand, the British pound continues to be weighed down by persistent Brexit-related uncertainties. In the latest development, the European Commission's vice president Margaritis Schinas told Britain on Saturday it has to sort out its own migrant problems post-Brexit. This comes amid the worsening row over the fishing rights between France and Britain, which further held back traders from placing bullish bets around the GBP/USD pair. That said, expectations for an imminent rate hike by the Bank of England extended some support.

There isn't any major market-moving economic data due for release from the UK on Monday, while the US economic docket features the only release of Pending Home Sales. This, in turn, leaves the GBP/USD pair at the mercy of the USD price dynamics and fresh developments surrounding the Brexit saga. Apart from this, the broader market risk sentiment, along with the US bond yields might influence the USD price and provide some impetus to the major.

Technical levels to watch