GBP/USD Exchange Rate Recovers as Stronger UK Services Data Supports Pound

Modified: Monday, 5 October 2026 20:31 BST - Written by Frank Davies

STORY LINK GBP/USD Exchange Rate Recovers as Stronger UK Services Data Supports Pound

The Pound US Dollar (GBP/USD) exchange rate moved unevenly on Monday as changing sentiment kept the currency pair volatile.

At the time of writing, GBP/USD was trading around $1.3226, edging lower on the day but remaining above its earlier low of $1.3192.

The US Dollar (USD) began the week on a firmer footing, with a risk-averse tone across markets driving demand for the safe-haven currency.

Concerns over the escalating Middle East crisis initially soured sentiment, while shipping activity through the Strait of Hormuz was brought close to a standstill on Monday after attacks in the surrounding area over the weekend.

However, the shift in sentiment proved short-lived.

Markets responded positively to the sharp repricing of Federal Reserve interest rate expectations following Friday’s disappointing payrolls figures.

The resulting pullback in Fed rate bets put pressure on the US Dollar, causing the currency to rapidly surrender its early gains.

The Pound (GBP), which remains sensitive to shifts in risk appetite, initially weakened against the US Dollar in the early stages of Monday’s session as investors moved towards safer assets.

Sterling subsequently clawed back its losses, with support coming from the UK’s final services PMI release.

The September reading was revised up to 52.1 from the preliminary 51.7.

While the result still represented a moderation from August’s 52.5, the upward revision exceeded expectations and provided a boost to GBP.

Near-Term GBP/USD Forecast: Fed Speakers in Focus

Looking ahead, Federal Reserve officials Michelle Bowman and John Williams are both scheduled to speak on Tuesday.

Both policymakers are viewed as relatively dovish, meaning their remarks could put pressure on the US Dollar if they indicate that they would oppose an interest rate hike this month.

The Pound, meanwhile, faces a quiet UK data calendar, potentially leaving GBP with limited domestic catalysts for movement.

Risk appetite could also play a key role in determining the GBP/USD exchange rate.

A renewed shift towards safer assets would likely favour the safe-haven US Dollar, whereas a brighter outlook for risk appetite could benefit the increasingly risk-sensitive Pound.

Changes in sentiment could therefore bring another bout of volatility to the currency pair.

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TAGS: Pound Dollar Forecasts