• The GBP/USD price analysis leans to the upside, driven by upbeat UK Q2 GDP and the US government shutdown.
• Softer JOLTS data weakened the dollar, revealing a cooling labor market.
• All eyes are now on the US ADP and ISM PMI data due today.

The GBP/USD price analysis shows a mildly bullish scenario as the pair extends its winning streak into the midweek session. The price is hovering above the 1.3470 area during the early London session. Better-than-expected UK data, coupled with a weaker dollar, continue to underpin the demand for the GBP/USD.

The pound has primarily benefited from the upside surprise in Q2 GDP, as the UK economy expanded 1.4% year-over-year, beating the forecast of 1.2%, while quarterly growth remained at 0.3%. The data provided relief to the pound despite BOE member Ramsden’s comments about the need for a rate cut. He highlighted that the restrictive policy could further weigh on jobs and investments, while receding inflationary pressure gives enough room to reduce the rates.

On the other hand, the dollar came under pressure after the weaker US jobs data reinforced the likelihood of a near-term rate cut. According to the CME FedWatch Tool, the probability of a rate cut in October now stands at 97%, with another cut in December at a 76% probability. The recent JOLTS job opening report showed a slight rise to 7.23 million. However, the hiring rate slipped 3.2%, the lowest level since mid-2024. Consumer confidence data also remained downbeat, amplifying the risk of reduced household spending and growth.

Against this backdrop, the US government shutdown has further weighed on the US dollar. More than 750k US federal employees face furloughs, while the BLS has already warned of a delayed release of NFP data. In the absence of key data, the market participants could find guidance from ADP Employment and ISM PMI. The lack of clarity has further eroded dollar sentiment, lifting the GBP/USD to multi-session highs.
 

Key Events Ahead: US ADP, PMI

The GBP/USD direction now hinges on the US data and Fed communication. A softer ADP and a weaker PMI could reinforce the bulls, pushing towards the 1.35 – 1.36 range. Conversely, signs of resilience in private sector jobs could provide a respite for the dollar.
 

GBP/USD Price Technical Analysis: Make or Break at 1.3450
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

The GBP/USD managed to find support around the demand zone near 1.3350 and posted gains of more than 100 pips, closing above the 20- and 50-period MA. However, the 100- and 200-period MAs around 1.3500-20 could resist the upside.

On the flip side, any weakness triggered by a market catalyst could bring the pair to 1.3400 ahead of 1.3350. The key is to sustain above the pivot of 1.3450.

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