GBP/USD Climbs as Fed Rate Cut Bets Rise and U.S. Shutdown Risks Pressure Dollar

The British pound (GBP) advanced against the U.S. dollar (USD) on Monday, with GBP/USD trading near 1.3430, up 0.24%. The move comes as markets price in more Federal Reserve rate cuts, while political and fiscal uncertainty lingers in both the U.S. and U.K.

Sterling Gains on Central Bank Divergence

Despite concerns about the U.K.’s fiscal position, sterling found support from diverging monetary policy expectations. The Bank of England (BoE) is widely expected to hold rates steady at its upcoming meeting, while traders are betting on two Fed rate cuts in the coming months.

BoE Deputy Governor Dave Ramsden maintained a hawkish tone, saying that while the U.K.’s disinflation trend has stalled, he remains “confident we will get inflation back to target with current restrictive rates and market expectations.”

In contrast, Cleveland Fed President Beth Hammack warned that U.S. inflation remains too high and moving in the “wrong direction.” She also pointed to tariffs as a factor delaying the disinflation process.

U.S. Shutdown Risks Weigh on the Dollar

The U.S. dollar is under additional pressure as government shutdown risks grow. According to Bloomberg, the Bureau of Labor Statistics (BLS) is preparing to suspend economic data releases if a shutdown occurs, a move that could leave markets without critical insights.

Meanwhile, U.S. housing data offered a brief positive surprise, with Pending Home Sales rising 4% in August, beating forecasts of 0.3% and reversing a revised -0.3% drop in July. Still, traders are more focused on the political gridlock and the heavy slate of Fed speakers, including Alberto Musalem, John Williams, and Raphael Bostic.

GBP/USD Technical Outlook

The pound has logged two consecutive bullish sessions but remains capped below the 1.3480–1.3500 resistance zone. A sustained break above that range would be needed to shift momentum in favor of sterling.

• Immediate resistance: 1.3466
• Initial support: 1.3400
• Key downside target: 1.3323 (September 25 low)

The Relative Strength Index (RSI) continues to signal bearish momentum. If GBP/USD fails to reclaim 1.3466, sellers may look to drive the pair lower toward the 1.3400 level.

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