The GBP/USD pair began the new week with a moderate tone following last week's gains and is currently holding confidently above the key psychological level of 1.3400. At the same time, the mixed fundamental backdrop calls for caution among bullish traders.

The U.S. dollar is struggling to build on its Friday rebound amid expectations of further Federal Reserve rate cuts later this year. In addition, economic risks — linked to the prolonged U.S. government shutdown, ongoing global trade tensions, and signs of weakness in the U.S. economy — are forcing dollar bulls to adopt a defensive stance. Meanwhile, disappointing UK labor market data, published last week, have reinforced speculation that the Bank of England may continue its gradual rate-cutting cycle. Furthermore, concerns over the UK's fiscal situation, ahead of the important autumn budget announcement in November, are weighing on the British pound, and consequently, on the GBP/USD pair.

This environment calls for caution among traders positioned for further pound strength, as well as readiness for potential volatility.

From a technical standpoint, oscillators on the daily chart have not yet entered positive territory, suggesting traders should be careful when opening new long positions. However, on the 4-hour chart, oscillators are in positive territory, and prices are trading above both the 100-SMA and the 9-EMA, confirming a bullish outlook in the near term.

On Monday, no significant economic publications are expected from either the UK or the U.S., leaving the GBP/USD pair mainly influenced by the dollar's overall market dynamics.