Sterling maintained its sideways trajectory against the US dollar during Tuesday's Asian session, with the GBP/USD pair oscillating around the 1.3630 mark for a second consecutive day without a clear directional bias. The greenback's recovery from its mid-May lows has exerted some pressure on the pair's upside, yet the pound's failure to follow through with significant losses indicates that bearish momentum remains constrained. With a heavy calendar of macroeconomic events on the horizon, investors are opting to await fresh policy and inflation cues before committing to positions.

The dollar's recent rebound has been driven primarily by safe-haven demand. Following the expansion of secondary sanctions targeting Iran-related economic activities by the United States, concerns over energy supply and regional risks have resurfaced. US Treasury Secretary Bessent affirmed that Washington will persist in restricting Iran's economic network, warning that institutions engaging in related business could face sanctions. Concurrently, elevated crude oil prices persist as regional energy supply uncertainties linger.

The impact of rising energy costs on the pound and the dollar is not symmetrical. On one hand, higher oil prices could reignite US inflation expectations, prompting markets to scale back bets on aggressive Federal Reserve easing, thereby underpinning the dollar. On the other hand, the UK also faces imported inflationary pressures, which could curtail the Bank of England's scope for further monetary loosening. Consequently, rising energy prices cannot be interpreted as an unambiguously bearish signal for sterling; the ultimate effect hinges on the relative shifts in monetary policy expectations between the US and the UK.

US inflation data for July came in relatively benign, reinforcing market expectations that the Federal Reserve will hold rates steady at its September meeting. However, the probability of at least one more rate hike before year-end remains above 75%, driven by energy price volatility and persistent inflation stickiness. This suggests the dollar currently lacks strong upward momentum from rate differentials but has not yet lost policy support.

Across the Atlantic, the focus is on balancing growth and inflation. Should UK economic activity demonstrate continued resilience while energy-driven inflation ticks higher, the Bank of England's future easing capacity could be constrained, providing support for the pound. Conversely, if growth decelerates noticeably and policy expectations shift back toward loosening, sterling could face renewed downward pressure.

From a fund flow perspective, investors have not significantly increased long dollar positions, instead adopting a wait-and-see approach ahead of data releases. The dollar's rebound following an extended correction may be more attributable to short covering and position rebalancing rather than the start of a new trend, absent fresh catalysts for rate expectations.

This week's US PCE price index data is poised to serve as a key directional catalyst for GBP/USD. Market participants will scrutinize whether core inflation remains subdued. A higher-than-expected reading could lift US Treasury yields and bolster dollar demand, pushing GBP/USD toward further corrective declines. A softer print, however, would reinforce expectations of Fed easing, limiting the dollar's recovery and allowing the pound to retest recent highs.

Additionally, remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium warrant close attention. If he emphasizes inflation risks and strikes a hawkish tone, the dollar could strengthen further. A focus on employment and growth risks, conversely, could diminish expectations for additional tightening, opening upside potential for GBP/USD.

On the daily technical chart, GBP/USD maintains a relatively constructive medium-term structure, trading above the 200-day simple moving average at 1.3431. However, short-term bulls need a decisive break above the 1.3660-1.3665 supply zone to confirm renewed upside momentum. A sustained move beyond 1.3665 could pave the way for a test of 1.3700 and then 1.3750. Failure to clear this level would likely prolong the current high-level consolidation.

To the downside, the 1.3500 area serves as immediate psychological support, with the 200-day moving average at 1.3431 representing a more critical structural level. A daily close below 1.3431 would significantly undermine the constructive bias and potentially open the door to deeper technical correction.

On the 4-hour chart, GBP/USD is in a high-level sideways phase, with short-term moving averages converging, indicating the market is awaiting a decisive catalyst. Holding the 1.3580-1.3600 region and reclaiming 1.3665 would shift momentum back in favor of buyers. A break below 1.3580 could trigger a pullback toward the 1.3500 area. A renewed expansion of the MACD histogram would support an upside breakout, while persistent momentum exhaustion at highs warrants caution against failed rallies.

In summary, GBP/USD finds itself at a crossroads, caught between dollar rebound dynamics and underlying pound support. Cooling US inflation has capped the dollar's upside, yet energy prices, geopolitical risks, and potential Fed tightening continue to offer support. Meanwhile, the absence of significant sterling selling suggests market expectations for aggressive BoE easing have not yet formed a strong headwind.

Near-term, 1.3660-1.3665 remains the critical resistance zone for bulls, while 1.3580-1.3600 is key support on the 4-hour timeframe. The 1.3431 level remains the vital daily trend line. The upcoming PCE data and Jackson Hole policy signals will likely determine whether GBP/USD can break free from its current consolidation. Should US inflation continue to cool and drive the dollar lower, sterling could challenge levels above 1.3665. Conversely, an upside surprise in PCE or a more hawkish Fed stance could see GBP/USD retreat toward 1.3500 or even 1.3431. Given the prevailing conditions, traders may be better served awaiting confirmation of a breakout at key technical levels rather than chasing price action within the middle of the range.