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The GBP/USD pair edges higher for the second straight day on Tuesday and looks to build on the previous day's recovery from the 1.3390 region, or a three-week low. Spot prices currently trade around the 1.3475 region, up nearly 0.10% for the day.

The US Dollar (USD) struggles to attract any meaningful buyers amid growing worries about the US Federal Reserve's (Fed) independence, and turns out to be a key factor acting as a tailwind for the GBP/USD pair. In fact, prosecutors opened a criminal investigation into Fed Chair Jerome Powell. In a rare statement, Powell said that the threat of criminal charges against him is a consequence of the central bank setting interest rates based on the best assessment of what will serve the public, rather than following the preferences of the President.

Despite the negative development, the downside for the USD remains limited amid reduced bets for more aggressive policy easing by the Fed, which, in turn, could cap gains for the GBP/USD pair. A fall in the US Unemployment Rate, to a larger extent, overshadowed a miss in the headline US Nonfarm Payrolls (NFP) figures and backed the case for potentially stagnant monetary policy in the first quarter. This, in turn, holds back the USD bears from placing aggressive bets as the focus shifts to the latest US consumer inflation figures, due later today.

In the meantime, rising bets for two more interest rate cuts by the Bank of England (BoE) in 2026 could act as a headwind for the British Pound (GBP) and also keep a lid on any meaningful upside for the GBP/USD pair. Traders this week will also confront the release of the US Producer Price Index on Wednesday. Apart from this, the monthly UK GDP report on Thursday would provide some meaningful impetus to the currency pair.

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