Fundamental Market Analysis for October 3, 2025 GBPUSDThe pound is holding most of its recent gains, trading near 1.34400–1.34500. The pair is supported by signs of cooling in the U.S. labor market and related expectations of further monetary easing by the Fed in the coming months. Budget uncertainty in Washington maintains some market nervousness, but the impact is uneven: when U.S. yields ease, the pound tends to benefit as the dollar’s rate premium narrows.
From the U.K. side, there are few strong domestic catalysts: the Bank of England maintains a measured approach, preserving flexibility amid slowing inflation and fragile growth. For sterling, this implies less need to compensate currency risk with extra yield. Combined with a modest improvement in global risk appetite, this supports demand for GBP against USD in the mid-1.34–1.35 range.
Fed members’ remarks remain an important backdrop: any signals about the pace of U.S. rate cuts can swiftly shift short-term flows. But with official data releases delayed during the government pause, markets are likely to rely on alternative assessments of employment and inflation expectations—a setup under which the pound keeps an advantage over the dollar if U.S. yields stay soft.
Trading recommendation: BUY 1.34450, SL 1.33950, TP 1.35250
