The GBP/USD pair climbed modestly on Monday, trading around 1.3430 with a 0.24% daily gain, as the U.S. Dollar (USD) eased from last week’s advance. The Greenback remains under pressure ahead of a busy U.S. economic docket and heightened concerns over a potential government shutdown.
Investor sentiment toward the Dollar softened after reports that the U.S. Bureau of Labor Statistics (BLS) would suspend data releases in the event of a shutdown, which could disrupt key market-moving indicators such as Nonfarm Payrolls. The uncertainty has added to speculation that the Federal Reserve (Fed) may lean further toward monetary easing if economic visibility becomes impaired.
On the U.S. data front, Pending Home Sales surprised to the upside, rising by 4% in August versus forecasts for just a 0.3% increase, while July’s figure was revised higher to -0.3%. Despite the improvement, Fed rhetoric continues to capture more attention. Cleveland Fed official Beth Hammack reiterated that inflation remains too high and warned that tariffs are partly stalling disinflation, though she stopped short of signaling larger hikes.
Meanwhile, the UK side of the equation offers modest support for the Pound Sterling. The Bank of England (BoE) is expected to keep rates steady, but Deputy Governor Dave Ramsden’s hawkish remarks suggested that restrictive rates remain necessary to push inflation back to target. He noted that the UK’s disinflationary trend had “stalled,” signaling policymakers are not in a rush to cut rates.
Political headlines also played a role, with the UK Labour Party conference in Liverpool drawing investor focus. While fiscal concerns about the UK persist, the relative central bank divergence between the BoE and the Fed keeps Sterling underpinned.
Looking ahead, market attention will turn to speeches from Fed Presidents Alberto Musalem, John Williams, and Raphael Bostic, which may influence near-term Dollar direction.
Trade Idea:
GBP/USD likely to hold support above 1.3380 and retest resistance near 1.3480, as Fed rate cut bets and U.S. shutdown risks weigh on the Dollar.