GBP/USD Price Forecast - Pound to Dollar at 1.3435 Faces Data Blackout and Fed Cut Pressure as Dollar Index Stalls Below 98

GBP/USD Holds 1.3435 Amid U.S. Shutdown and Fed Cut Bets

The GBP/USD pair is trading around 1.3435, attempting to stabilize after sliding as low as 1.3424 on Thursday. The rejection from 1.3500 capped a four-day recovery and forced sterling back into its consolidation band between 1.3400 and 1.3500. The recent four-month low in the U.S. Dollar Index at 97.90 has given cable some breathing space, but the broader outlook remains fragile as politics and central banks dominate sentiment.

Shutdown Disrupts U.S. Data and Market Transparency

The U.S. government shutdown has halted the release of official economic data, including the crucial Nonfarm Payrolls report and weekly jobless claims. Investors are now operating without a clear view of the labor market. Private indicators offer limited insight: Challenger job cuts dropped from 85,979 in August to 54,064 in September, but hiring plans collapsed to their weakest since 2009. That points to an economy still cooling despite rate cuts. With no official confirmation, traders remain cautious, keeping GBP/USD locked in a narrow range.

Fed Rate Path Anchors Dollar Outlook

Markets are pricing in a 97% probability of a 25 bps Federal Reserve cut at the October meeting, which would bring the federal funds rate to 3.75%–4.00%. Expectations for another reduction in December sit at 91%, with March and April also on the radar for further easing. The repricing keeps the U.S. dollar capped, and with the DXY holding under 98.00, sterling manages to stay above 1.3430. Yet the lack of economic confirmation leaves GBP/USD vulnerable to volatility if policy expectations shift abruptly.

UK Macro Calendar Quiet, BoE Outlook Neutral

Sterling has few domestic drivers in the current session. The Bank of England recently held rates at 5.25%, signaling caution as growth stagnates. UK service-sector PMI data showed only mild expansion, reinforcing the impression of an economy struggling to gain traction. With no new UK data releases, the pound is at the mercy of dollar flows. That lack of domestic momentum makes external shocks—whether U.S. politics, sanctions, or Fed policy—the defining factors for GBP/USD.

Technical Picture: Cable Caught Between 1.3400 and 1.3500

Technically, GBP/USD is boxed in. The 50-day EMA just below 1.3500 blocks any meaningful breakout, while immediate support sits at 1.3400. A decisive push above 1.3500 could open the way toward 1.3550–1.3600, whereas a breakdown below 1.3400 risks accelerating to 1.3350 and even the 200-day SMA near 1.3280. RSI readings suggest the pair has exited oversold conditions, but momentum remains too weak to sustain a clear direction. Traders are waiting for a catalyst that could confirm either a bullish breakout or a renewed decline.

Risk Sentiment Dictates Short-Term Cable Moves

Investor mood has proven decisive for sterling. Thursday’s selloff in equities strengthened the dollar, pushing GBP/USD lower, but by Friday a modest rebound in risk appetite allowed the pair to hold above 1.3430. If risk sentiment deteriorates again due to extended U.S. political gridlock or weak corporate earnings, sterling could quickly retest 1.3400. Conversely, a revival in global risk-taking would give GBP/USD space to retest 1.3500 resistance.

Medium-Term Outlook Hinges on U.S. Data Resumption

The medium-term view for GBP/USD remains one of consolidation rather than trend. As long as U.S. macro data is suspended, traders will lean heavily on Fed policy signals and the performance of U.S. equities and Treasuries. If U.S. ISM Services PMI or final S&P Global PMI confirm weakness, it could give sterling the lift needed to retest 1.3500–1.3550. Stronger readings, however, would reinforce dollar resilience, capping cable near 1.3400. The lack of clarity ensures volatility remains a permanent feature of the pair’s October outlook.

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