GBP/USD Price Forecast - Pound to Sterling Jumps to 1.3512 as Weak U.S. Jobs Data, Shutdown, and Fed Cut Bets Fuel Sterling

GBP/USD Hits One-Week High at 1.3512 as Dollar Suffers from Jobs Shock and Shutdown Risk

The GBP/USD currency pair advanced strongly to 1.3512, its highest since September 24, extending a four-day rally supported by a sharp weakening of the U.S. dollar. Sterling’s momentum was fueled by disappointing U.S. labor data, growing certainty around Federal Reserve rate cuts, and the political and economic disruption caused by the ongoing U.S. government shutdown. The move reflects a decisive shift in sentiment as traders rotate out of the dollar, driving the U.S. Dollar Index (DXY) to 97.50, near a one-week low.

Labor Market Weakness: ADP Misses by 82,000 Jobs

ADP private-sector payrolls showed a surprise 32,000 job loss in September, against expectations for a 50,000 gain. The shock worsened after August’s figures were revised from a previously reported +54,000 to a -3,000 decline. The adjustment highlights persistent fragility in U.S. hiring trends. Economists had argued that Q2 growth near 3% should underpin jobs, but instead companies are showing caution. The weak print adds heavy weight to Friday’s upcoming Non-Farm Payrolls (NFP) release—already threatened by the government shutdown’s impact on Bureau of Labor Statistics reporting.

U.S. PMI Mixed, Dollar Unable to Rebound

Manufacturing data failed to provide relief for the dollar. The S&P Global Manufacturing PMI held steady at 52.0, while the ISM measure inched up to 49.1, still below the growth threshold. Although this was a mild improvement from 48.7 in August, it kept the manufacturing economy in contraction territory. Traders responded by marking down dollar value further, particularly against currencies with stronger macro backdrops like the British pound.

Sterling Strength Reinforced by UK Growth Surprise

Sterling’s push higher came not only from dollar weakness but also from solid domestic data. UK Q2 GDP expanded 1.4% year-over-year, beating the consensus of 1.2%, with quarterly growth steady at 0.3%. The upside surprise offset dovish comments from BoE policymaker Dave Ramsden, who warned of restrictive policy’s impact on jobs and investment. For markets, the stronger GDP print underlines resilience in the UK economy despite tight monetary conditions and gave the pound an additional boost in its climb above 1.3450.

Shutdown Fallout Amplifies Sterling’s Advantage

The U.S. government shutdown has now placed more than 750,000 federal workers on furlough, delaying essential economic data and deepening concerns about fiscal mismanagement. Market participants worry that without timely releases—particularly the September NFP—the Fed will rely heavily on private reports like ADP and ISM, which have already disappointed. This structural uncertainty magnifies pressure on the dollar and plays directly into GBP/USD’s surge toward the 1.3530–1.3600 resistance zone.

Market Positioning: Fed Cuts Nearly Fully Priced

Interest rate markets have accelerated their bets on Federal Reserve easing. According to the CME FedWatch Tool, traders now assign a 97% probability of a cut in October and a 76% probability of another cut in December. This represents one of the most aggressive pricing cycles since the pandemic, sharply undermining the dollar’s yield advantage. Sterling’s relative appeal grows in this context, even though the BoE faces pressure to cut in early 2026.

Technical Picture: 1.3450 Support Becomes Pivot

On the technical front, GBP/USD found strong demand around 1.3350–1.3400, generating a rally of more than 100 pips. The pair is now testing resistance at 1.3482 (200-EMA), with immediate support at 1.3438 (50-EMA). The RSI stands at 62, leaving room for further upside before overbought territory. A sustained breakout above 1.3480–1.3500 opens targets at 1.3537 and 1.3590, while failure to hold above 1.3450 could trigger a retracement to 1.3386 and possibly back toward 1.3350. The overall structure favors bulls while the pair holds above its pivot.

Currency Heat Map: GBP Dominates Peers

Cross-currency performance reinforces the pound’s momentum. GBP gained 0.53% against USD, 0.36% against EUR, and 0.58% against CAD, while adding 0.55% versus CHF. Its only minor setback was a 0.28% decline versus JPY, a classic risk-off haven. This relative strength signals that sterling’s rally is not isolated to GBP/USD but reflects a broader realignment of flows into the pound amid global uncertainty.

Forward Outlook for GBP/USD

The pair’s near-term trajectory will be shaped by the October 2 ADP and ISM reports, along with clarity on how long the shutdown will last. Any additional weakness in U.S. labor indicators could propel GBP/USD beyond 1.36, cementing bullish control. Conversely, a surprise rebound in payrolls or PMI strength could provide temporary support for the dollar, testing the pair’s ability to hold above 1.3450.

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