GBP/USD sinks as US shutdown sparks risk aversion, US Dollar strengthens

GBP/USD drops as traders turn risk-averse as government shutdown delays key US data.
Dallas Fed’s Logan warns that inflation remains above target, endorsing a moderately restrictive policy despite softer labor market signals.
UK outlook pressured by persistently high inflation and the Reeves’ Autumn Budget.

Christian Borjon Valencia FXStreet

GBP/USD dives during the North American session as the US government shutdown extends for the second straight day on Thursday, triggering a delay in economic data releases. Meanwhile, the US Dollar (USD) strengthens as traders assess the impact of the shutdown. The pair trades at 1.3424, down 0.38%, at the time of writing.

Sterling drops amid lack of US data, hawkish Fed remarks and looming UK fiscal concerns

The mood of the financial markets changed and turned risk-averse as traders began to trade 'blindly' without crucial economic data from the US. In the meantime, the Challenger Job Cuts for September showed that companies announced plans to fire 54.064K people, less than August’s 85.979K.

Andy Challenger, senior vice president at Challenger, Gray & Christmas, said, “Right now, we’re dealing with a stagnating labor market, cost increases, and a transformative new technology.”

Aside from this, Dallas Fed President Lorie Logan was hawkish, stating that inflation is running above target and trending higher. She recognized that risks exist on both sides of the mandate, stating that the job market appears fairly balanced but is slowing, while adding that the economy remains resilient. Regarding monetary policy, she said it is moderately restrictive, appropriate for now, as tariffs contributed to the recent jump in inflation.

Across the pond, investors are waiting for UK’s Autumn Budget, which is due in eight weeks. Finance Minister Rachel Reeves would try to stay on course for her fiscal targets.

The docket revealed that the Bank of England (BoE) Decision Maker Panel (DMP) reported that companies expect one-year inflation to rise to 3.7%.

BoE Catherine Mann commented that the inflation rate in the UK became persistently high, though she did not disregard that further rate cuts were completely off the table.

GBP/USD Price Forecast: Technical outlook

GBP/USD is forming a ‘bearish engulfing’ candle chart pattern, a hint that sellers are outweighing buyers. However, a daily close below the October 1 low of 1.3434 is needed to confirm the pattern.

If achieved, GBP/USD key support levels would be 1.3400, the September 25 low of 1.3323 and the 1.3300 figure. Otherwise, look for buyers to push prices above the 50-day SMA at 1.3459, eyeing a test of the 100-day SMA at 1.3491 and the 20-day SMA at 1.3504.

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.05%	-0.18%	-1.40%	0.31%	-0.55%	-0.39%	0.21%
EUR	-0.05%		-0.23%	-1.62%	0.25%	-0.59%	-0.44%	0.14%
GBP	0.18%	0.23%		-1.29%	0.49%	-0.42%	-0.21%	0.38%
JPY	1.40%	1.62%	1.29%		1.76%	0.92%	0.91%	1.69%
CAD	-0.31%	-0.25%	-0.49%	-1.76%		-0.80%	-0.68%	-0.10%
AUD	0.55%	0.59%	0.42%	-0.92%	0.80%		0.15%	0.74%
NZD	0.39%	0.44%	0.21%	-0.91%	0.68%	-0.15%		0.75%
CHF	-0.21%	-0.14%	-0.38%	-1.69%	0.10%	-0.74%	-0.75%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.