- GBP/USD showed some cautious gains on Wednesday after reaching the 1.3500 mark.
- Market momentum overall seems limited, with investors apprehensive about possible US government shutdowns.
- Key labor and inflation data from the BLS could be delayed or completely halted during this crucial time for interest rate monitoring.
The GBP/USD pair eased into its fourth consecutive bullish session, easily touching the 1.3500 threshold before settling at a 0.27% gain for that trading day. Cable traders are now approaching the middle of the week, while concerns about a US government shutdown loom, potentially disrupting vital official labor and inflation reports, coupled with a relative lack of significant economic data from the UK.
Currently, the US federal government is in a sort of shutdown mode, with Congress failing to finalize the budget spending measures before the beginning of the fiscal year on October 1. This week, Democrats attempted to push through two separate budget settlement proposals, but House Republicans have largely opted out of budget discussions, leaving a temporary funding solution in limbo while they assess the proposed bills.
Government shutdowns seem to be becoming a regular occurrence, particularly during Trump’s administration. This would mark the fourth instance of a federal shutdown over budget conflicts, a pattern Trump has been closely associated with during his two terms. Notably, the last shutdown in 2018 stretched on for 35 days, setting the record for the longest in US history. Trump has previously attributed such shutdowns to a leadership failure, suggesting that “the problem starts at the top.”
ADP’s employment change figures were unexpectedly low, recording a decrease of -32K instead of the anticipated gain of 50K for September. Moreover, August’s initial release of 54K was sharply revised down to -3K. Though these ADP numbers often undergo revisions, they tend to miss expectations more often than not since the service began in 2025.
The Bureau of Labor Statistics (BLS) is expected to postpone or cancel the scheduled release of the September non-farm payroll (NFP) report this week. The ongoing US federal government shutdown, which is supposed to begin Friday, complicates the ability of official data services to maintain normal operations. The potential suspension of the NFP report comes at a time when the market is closely scrutinizing labor data while anticipating the Federal Reserve’s next steps regarding interest rate adjustments.
In light of the risk to the NFP report, investors are increasingly turning to alternative data like the ADP figures. According to CME’s FedWatch tool, the likelihood of a quarter-point interest rate cut on October 29 has surged to 99% following the ADP report. Additionally, there’s about a 90% chance of a third consecutive rate cut on December 10, with the Fed possibly lowering rates for a fourth time by the latest in April.
