GBP/USD Price Forecast - Pound to Dollar Stabilizes at 1.3461 as U.K. Growth Beats Forecasts and U.S. Shutdown Fears Pressure Dollar

GBP/USD Extends Gains as Shutdown Fears Pressure Dollar and Sterling Holds 1.3461

The British pound has extended its advance against the U.S. dollar for a third consecutive session, with GBP/USD trading at 1.3461, up 0.20% on the day, as political dysfunction in Washington drives investors to sell the greenback. The looming U.S. government shutdown has weakened demand for the dollar, raising fears that critical economic releases such as Friday’s Nonfarm Payrolls may be delayed. This comes as the U.K. delivered an upside surprise in growth, with Q2 GDP expanding 1.4% year-on-year, beating expectations of 1.2%. The combination of dollar weakness and U.K. resilience has kept sterling firm, even though the pair is still poised to close the month down 0.40% overall.

Labour Market Data and Fed Policy Expectations Remain Central for GBP/USD

The U.S. labor market remains the defining factor for near-term dollar momentum. Job openings rose modestly from 7.208 million in July to 7.227 million in August, beating estimates but signaling only gradual demand for workers. At the same time, Conference Board Consumer Confidence plunged from 97.8 to 94.2, missing forecasts of 96.0 and marking the ninth straight decline in perceptions of job availability. The divergence between employment growth and consumer outlook has put the Federal Reserve in a difficult position. Markets now price in another two basis points of easing by year-end, with cumulative cuts totaling 104 basis points through 2026. A stronger Nonfarm Payrolls release could halt GBP/USD’s rally by reviving hawkish Fed bets, while a weak print could open the path toward 1.35–1.36.

Technical Picture: 1.3300 Holds as Support, Resistance Builds at 1.3450–1.3500

GBP/USD has recovered from September lows near 1.3230, a level that aligned with the ascending trendline from July. Momentum carried the pair back to test the 1.3450 resistance zone, a confluence of the 50-day, 100-day, and 20-day simple moving averages at 1.3463, 1.3488, and 1.3504 respectively. The relative strength index (RSI) is still below neutral but is trending higher, suggesting that buying pressure is gathering pace. If GBP/USD breaks above 1.3500, the next resistance lies at 1.3550, followed by 1.3600 and 1.3700. On the downside, failure to defend 1.3400 could push the pair back toward 1.3330, with further losses risking a return to the 1.3300 support floor.

Political Risks on Both Sides of the Atlantic Shape Sterling Outlook

While the U.S. shutdown drama dominates headlines, domestic U.K. politics remain a secondary but important driver for sterling. The Labour Party conference in Liverpool has investors cautious about fiscal positioning, with concerns that aggressive spending promises could stoke gilt volatility. Bank of England rhetoric offers a counterbalance, with hawkish commentary from Governor Andrew Bailey expected later this week. If Bailey signals that rates will remain restrictive despite slowing growth, sterling could gain an additional layer of support. On the U.S. side, President Trump’s negotiations with Congress remain a flashpoint: even a short-lived shutdown could weaken the dollar further, giving GBP/USD room to extend higher.

Cross-Currency Performance Highlights Sterling’s Relative Strength

Currency heat maps show sterling outperforming the U.S. dollar but losing ground against commodity-linked peers. In September, the pound gained 0.36% versus USD but fell 1.37% against AUD and 1.23% versus NZD. Against the euro, GBP dropped 0.67%, while advancing 1.02% over CAD. These moves reflect shifting global capital flows: sterling is not a high-beta currency like the Aussie or Kiwi but benefits when the dollar weakens on political or macro shocks. This positioning makes GBP/USD particularly sensitive to the evolving U.S. political impasse and Friday’s payrolls.

Outlook on GBP/USD: Consolidation Within 1.3300–1.3500 Band Before Breakout

With GBP/USD holding at 1.3461, the near-term picture remains one of consolidation inside the 1.3300–1.3500 range. Stronger U.K. GDP and resilient domestic sentiment provide a base, but the pair’s fate hinges on U.S. politics and Friday’s jobs data. A convincing breakout above 1.3500 would target 1.3550–1.3600, while a slip below 1.3400 risks a retest of 1.3330. Volatility remains elevated, with shutdown uncertainty and shifting Fed bets amplifying daily swings. Given the backdrop, GBP/USD is a Buy on dips toward 1.3330 with upside potential to 1.36–1.37, though political risk could deliver sharp reversals.

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