GBPUSD fluctuates amid US fiscal crisis and UK economic weakness

The GBPUSD pair showed weak momentum during Friday's morning session, trading near its 1.34319 opening. The pair's recent performance largely stemmed from the US government shutdown, an event that briefly devalued the dollar by preventing key economic data from being released, particularly employment reports. 

Although the budget crisis has been largely played out, the Federal Reserve (Fed) continues to rely on private information indicating a stagnant labor market. On top of that, investors expect another rate cut at the October 28–29 regulatory meeting, which puts pressure on the greenback, even though traders haven't fully priced in that possibility.

Meanwhile, persistent domestic weakness in the UK continues to weigh on the pound. Economic data remains soft, characterized by falling manufacturing activity and long-lasting inflation. While the Bank of England upholds a neutral stance, the GDP slowdown is stoking market concerns about the viability of monetary policy. 

US fiscal uncertainty is unlikely to be resolved before October 10, which could keep GBPUSD within a sideways trend. Nevertheless, a speedy settlement and the subsequent release of delayed economic reports could provide backing for the dollar, particularly if the official figures surpass private estimates.

The technical outlook confirms negative short-term momentum for the pair, with the daily chart showing a corrective phase following a rebound from support levels. The Stochastic Oscillator's downward crossover from the neutral zone signals this bearish sentiment. The On-Balance Volume (OBV) is also declining, thus pointing to fewer purchases and more selling.

Take into account the trading strategy outlined below: 

In light of the US government shutdown and the apparent exhaustion of bullish momentum, it is worth selling GBPUSD. Take profit: 1.33280. Stop loss: 1.35420.

This forecast is valid from October 3 till October 10, 2025.