GBP/USD extends its rally for the fourth straight session, trading near 1.3460 during Wednesday’s Asian session. The pair remains supported as the US Dollar (USD) weakens on the back of soft labor market data, which has heightened expectations of Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, markets are now pricing in a 97% chance of a rate cut in October and a 76% probability of another reduction in December.
US Job Openings data signaled further cooling in the labor market, with vacancies edging up slightly to 7.23 million in August from 7.21 million, while the hiring rate slipped to 3.2%—its lowest since June 2024. Layoffs, however, remained subdued. Traders now turn their focus to September’s ADP Employment Change and ISM Manufacturing PMI, though releases may be disrupted by the ongoing US government shutdown.
The shutdown, which has left around 750,000 federal employees furloughed, came after Congress failed to pass funding bills. The US Labor Department confirmed that its statistics agency will suspend key data releases, including Friday’s nonfarm payrolls report, if the shutdown continues.
Meanwhile, the Pound Sterling (GBP) found support from stronger-than-expected UK GDP figures. Data released Tuesday showed that the UK economy expanded by 1.4% year-on-year in Q2, beating the earlier estimate of 1.2%. Quarter-on-quarter growth was confirmed at 0.3%, in line with initial projections.
Still, Sterling’s upside could be capped after Bank of England (BoE) Deputy Governor Dave Ramsden signaled support for a potential rate cut, citing growing concerns in the labor market. He added that inflationary pressures are likely to ease further, suggesting current policy settings remain restrictive.
