Photo by Colin Watts on Unsplash 
 

GBP/USD backslid on Thursday, snapping a four-session winning streak and tumbling back from a technical rejection at the 1.3500 handle. Cable is drifting back into medium-term consolidation from 1.3400 to 1.3500 and price action is holding stubbornly just below the 50-day Exponential Moving Average. Markets are taking an extended pause in momentum as investors weigh how long the US government’s federal shutdown will last, and what the economic impacts could be.

The UK side of the economic data docket is devoid of any meaningful releases on Friday, leaving investors to grapple with sentiment about missing the latest US Nonfarm Payrolls (NFP) labor figures. Investors are banking on the latest government shutdown having a limited impact on economic factors. Traders largely expect this closure to be short-lived, and overall market focus remains pinned firmly on Federal Reserve (Fed) interest rate cuts through the remainder of the calendar year.

According to the CME’s FedWatch Tool, rate markets have fully priced in a follow-up interest rate cut on October 29, with over 90% odds of getting a third straight rate trim on December 10. Rate traders are also expecting the Fed to deliver a fourth quarter-point rate cut in either March or April of next year.

According to various sources, the latest NFP jobs report is ready to be released, but BLS operational guidelines mean labor data will be withheld during a government shutdown. The latest weekly Initial Jobless Claims data was not reported this week, despite being collected and compiled prior to the government shutdown. Unless the Trump administration specifically moves to publish the latest jobs figures, this week’s NFP print will remain in limbo pending the return of the US government.

GBP/USD daily chart
 

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