Fundamental Overview

GBP/USD managed to build on previous Friday's gains and closed in positive territory on Monday. The pair continued to stretch higher and reached its strongest level since March 21 above 1.2780 early Tuesday. The technical outlook suggests that GBP/USD could extend its uptrend as long as 1.2760 holds as support.

The US Dollar (USD) came under modest bearish pressure during the American trading hours on Monday and allowed GBP/USD to gain traction. Early Tuesday, the positive shift seen in risk mood makes it difficult for the USD to stay resilient against its peers and helps the pair keep its footing. Reflecting the upbeat market mood, US stock index futures were last seen rising between 0.1% and 0.5%.

The economic calander will offer the Conference Board's Consumer Confidence Index data for May later in the day. A noticeable improvement in consumer sentiment could support the USD and limit GBP/USD's upside in the second half of the day.

Investors will also keep a close eye on comments from Federal Reserve (Fed) officials. Minneapolis Fed President Neel Kashkari told CNBC earlier in the day that the Fed could consider raising the policy rate if inflation were to fail to come down further. "Many more months of positive inflation data, I think, to give me confidence that it’s appropriate to dial back," Kashkari added.