GBP/USD retreats as US Dollar strengthens amid government shutdown

Sterling retreats below 1.3450 after failing to clear key resistance; diverging Fed–BoE outlooks cap downside risks

The economic docket on both sides of the Atlantic remains scarce, yet Federal Reserve (Fed) officials are grabbing traders’ attention. San Francisco Fed Mary Daly said that a potential AI bubble in the stock market would threaten broader financial stability. In the meantime, Atlanta Fed Raphael Bostic revealed that turbulence is leading firms and households to be cautious.

Recently, Fed Governor Stephen Miran said that economic growth has been slower in the first half of 2025 due to uncertainty. He added that a neutral rate has come down, likely at 0.5%, and added that policy should be forward-looking.

The New York Fed Survey of Consumer Expectations showed that inflation expectations rose from 3.1% to 3.2% for one year, while for three and five years, they remained unchanged at 3% and 2.9%, respectively.

Across the pond, Bank of England (BoE) Chief Economist Huw Pill will cross the wires on Wednesday, followed by Catherine Mann on Thursday.

Divergence between the Fed and the Bank of England favors further upside in GBP/USD. Money market traders expect the Fed to cut rates at the October meeting, with odds standing at 94%. The BoE is expected to keep interest rates unchanged, with odds for a 25-bps cut at 10%.

GBP/USD Price Forecast: Technical outlook

The GBP/USD technical picture shows the pair is neutral to downward-biased, even though it remains above the 200-day SMA. Nevertheless, a daily close above 1.3500 could sponsor a leg up towards October 1 at 1.3527. A breach of the latter will expose the 1.3600 figure.

Conversely, if GBP/USD drops below 1.3450, the next support would be 1.3400, ahead of September 25 swing low of 1.3323.

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 Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.41%	0.03%	1.12%	-0.06%	-0.00%	0.25%	0.08%
EUR	-0.41%		-0.48%	0.62%	-0.50%	-0.45%	-0.20%	-0.37%
GBP	-0.03%	0.48%		1.22%	-0.02%	0.04%	0.29%	0.12%
JPY	-1.12%	-0.62%	-1.22%		-1.12%	-1.15%	-0.92%	-1.07%
CAD	0.06%	0.50%	0.02%	1.12%		0.10%	0.32%	0.14%
AUD	0.00%	0.45%	-0.04%	1.15%	-0.10%		0.25%	0.09%
NZD	-0.25%	0.20%	-0.29%	0.92%	-0.32%	-0.25%		-0.17%
CHF	-0.08%	0.37%	-0.12%	1.07%	-0.14%	-0.09%	0.17%

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).