GBP/USD pulls back towards 1.34 as Trump softens China rhetoric, US Dollar recovers

Sterling slips after weekly highs as Fed easing bets and US shutdown dominate sentiment

In an interview with Fox Business, Trump added, “I think we’re going to be fine with China, but we have to have a fair deal. It’s got to be fair,” and revealed that he plans to meet with his Chinese counterpart Xi Jinping in South Korea in two weeks.

In the meantime, the US government shutdown extended to its seventeenth day, as an agreement between the White House and the Democrats seems far at the time of writing.

Meanwhile, two US regional banks disclosed issues with fraudulent loans, igniting concerns about a credit crisis.

Across the pond, Sterling rose to a weekly high on expectations that the Federal Reserve (Fed) will resume its easing cycle, following dovish remarks by Jerome Powell on Tuesday.

Markets have fully priced in a 25-basis-point rate cut at the Federal Reserve’s October meeting, with just a 1% probability assigned to a larger 50-bps reduction, according to the CME FedWatch Tool.

Data in the UK showed that the economy grew 0.1% in August, after contracting 0.1% in July, as revealed by the Office for National Statistics (ONS). Britain's jobs data increased the chances of seeing the Bank of England (BoE) cutting rates, following a slowdown in wage growth, an indication that the labor market is weakening and that inflation could resume its downward path.

Traders are assigning a 44% probability to a 25-basis-point rate cut by the Bank of England in December, with full expectations for an easing move by March 2026. Markets also anticipate cumulative cuts totaling around 53 basis points by the end of 2026.

GBP/USD Price Chart – Daily

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 Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.45%	-0.48%	-1.07%	0.38%	0.42%	0.40%	-1.16%
EUR	0.45%		-0.02%	-0.56%	0.82%	0.96%	0.85%	-0.73%
GBP	0.48%	0.02%		-0.50%	0.85%	0.97%	0.87%	-0.73%
JPY	1.07%	0.56%	0.50%		1.41%	1.45%	1.51%	-0.15%
CAD	-0.38%	-0.82%	-0.85%	-1.41%		0.00%	0.03%	-1.57%
AUD	-0.42%	-0.96%	-0.97%	-1.45%	-0.00%		-0.09%	-1.68%
NZD	-0.40%	-0.85%	-0.87%	-1.51%	-0.03%	0.09%		-1.59%
CHF	1.16%	0.73%	0.73%	0.15%	1.57%	1.68%	1.59%

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).