GBP/USD Forecast: Dollar Pressured by Shutdown and Fed Cut Expectations

Modified: Thursday, 2 October 2025 22:30 BST - Written by Frank Davies

STORY LINK GBP/USD Forecast: Dollar Pressured by Shutdown and Fed Cut Expectations

The Pound to US Dollar (GBP/USD) exchange rate was largely muted on Thursday despite an ongoing US government shutdown.

At the time of writing, GBP/USD was trading at approximately $1.3497, virtually unchanged from the start of Thursday’s session.

The US Dollar (USD) remained under pressure against most of its peers on Thursday, weighed down by the ongoing US government shutdown.

Adding to the Dollar’s struggles was Wednesday’s ADP employment change report, which fell sharply to -32k, well below the expected rise to 50k.

The disappointing reading heightened expectations for future Federal Reserve interest rate cuts, further undermining USD exchange rates during Thursday’s European session.

Meanwhile, a slightly positive market mood also limited the ‘Greenback’s’ appeal on Thursday, as risk-on sentiment weighed on its safe-haven status.

The Pound (GBP) remained largely steady against most of its peers on Thursday, despite a quiet UK economic calendar.

Sterling drew limited support from the broadly positive market sentiment, with its risk-sensitive characteristics allowing it to gain slightly against traditional safe-haven currencies.

However, this same sensitivity to risk meant that GBP struggled against more risk-linked currencies, limiting any meaningful upside.

With no domestic data to drive momentum, the Pound largely drifted throughout Thursday’s European session, finishing the day on a subdued note.

Pound to US Dollar Forecast: UK and US PMIs to Drive Movement

Looking ahead to Friday’s European session, the GBP/USD exchange rate is set to be influenced by the release of the latest services PMIs from both the US and the UK.

In the US, the ISM services PMI will be the only significant data point, as the ongoing government shutdown prevents the publication of the latest non-farm payrolls and unemployment figures.

September’s reading is forecast to dip slightly, though it is still expected to remain above the 50 mark that separates expansion from contraction.

Should the data meet expectations, it could provide modest support for USD exchange rates.

For the UK, attention will turn to September’s finalised S&P services PMI.

The index is forecast to confirm a slowdown in the country’s key services sector, potentially weighing on investor sentiment towards Sterling.

If the data prints as expected, GBP exchange rates may struggle to gain ground, leaving the Pound vulnerable to renewed pressure as the week comes to a close.

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TAGS: Pound Dollar Forecasts