The Pound Sterling trades at about 1.3440 against the US Dollar during European trading hours. The US Dollar Index is close to 97.90 as economic worries continue due to a partial US government shutdown. This shutdown has postponed important data releases like the Nonfarm Payrolls report. According to the CME FedWatch tool, there is an 87% chance the Federal Reserve will cut rates in all remaining meetings this year.

US Private Sector Job Losses

In September, the US private sector lost 32,000 jobs, contrary to predictions of a 50,000 increase. The Bank of England’s Decision Maker Panel survey shows that companies expect stable employment levels, which may put pressure on the Pound. UK businesses anticipate that 12-month CPI inflation will slightly rise to 3.5%. Some Bank of England officials are considering interest rate cuts due to economic risks, while others caution that inflation shocks might not be temporary. The Pound/USD pair is trading near 1.3450 but is struggling to break above the 20-day EMA of 1.3476. The 14-day RSI is around 47.00, which suggests sideways movement as it remains between 40.00 and 60.00. Support is set at 1.3140, with resistance at 1.3726.

Impact of the US Government Shutdown

Currently, GBP/USD is stuck in a narrow range due to significant uncertainty from the US and UK. The ongoing US government shutdown is a major issue as it prevents the release of essential economic data. This information gap is causing the US Dollar to move sideways. The US economy was already showing signs of slowing before the data blackout. The last ADP private payrolls report for September 2025 indicated a surprising loss of 32,000 jobs, contrasting sharply with expectations for job gains. This weakness is why futures markets show an 87% likelihood that the Federal Reserve will cut interest rates at its remaining meetings this year. In the UK, the situation is complex, preventing the Pound from benefiting from the weakness of the dollar. The Bank of England’s survey reveals that companies have stopped planning new hires for the first time since the 2020 pandemic lockdowns. Additionally, the most recent inflation data from August 2025 still shows high prices rising at 6.7%, placing significant pressure on the central bank. For traders, this period of low movement is likely just temporary, suggesting that volatility may be building beneath the surface. It’s a classic opportunity for buying options strategies like straddles or strangles on GBP/USD, which can profit from a significant price move in either direction once US data is finally released. The current tight range suggests that these options may be relatively inexpensive. Given the grim outlook for the US economy, the most likely direction for GBP/USD appears to be upward once the uncertainty lifts. We might consider using call options or call spreads to prepare for a possible break above the 20-day moving average around 1.3476. These strategies provide a defined-risk way to bet on a rise towards the key resistance level at 1.3726. However, we should also guard against a downturn if sentiment shifts and UK economic issues become more prominent. Protective put options or put spreads can serve as a hedge against a drop towards the major support zone around the August 2025 low of 1.3140. The key is to be ready for a significant break in the range in the weeks ahead. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now