GBP/USD surges to one-week high as weak ADP data and US government shutdown dent US Dollar

• GBP/USD climbs to a one-week high, strongest since Sept 24, as the US Dollar weakens broadly.
• The ADP report showed US private-sector jobs fell by 32K in September.
• S&P Global Manufacturing PMI held steady at 52, while ISM PMI rose modestly to 49.1 but remained in contraction

The British Pound (GBP) advances sharply against the US Dollar (USD) on Wednesday, with GBP/USD climbing to a one-week high, reaching its strongest level since September 24, as the Greenback remains under broad pressure amid a weaker-than-expected ADP Employment Change report, the ongoing United States (US) government shutdown, and mounting bets on further Federal Reserve (Fed) interest rate cuts.

At the time of writing, GBP/USD is trading around 1.3520, extending its winning streak for a fourth day with a gain of over 0.50%. Meanwhile, the US Dollar Index (DXY), which measures the Greenback's performance against a basket of six major currencies, is hovering near 97.50, close to a one-week trough.

Data released by payroll processor ADP on Wednesday showed private sector employment declined by 32,000 jobs in September, defying expectations for a 50,000 gain. Adding to the downside surprise, August's figure was revised sharply to a 3,000 loss from the previously reported 54,000 gain.

Commenting on the release, Dr. Nela Richardson, Chief Economist at ADP, said, "Despite the strong economic growth we saw in the second quarter, this month's release further validates what we've been seeing in the labor market, that US employers have been cautious with hiring".

The weak ADP data came as the US government shutdown cast doubt over Friday's Nonfarm Payrolls (NFP) release, boosting the report's significance for markets.

Meanwhile, the S&P Global US Manufacturing Purchasing Managers Index (PMI) for September held steady at 52, matching both forecasts and the previous month's reading, signaling that the sector remains in modest expansion. However, the more closely watched ISM Manufacturing PMI rose only slightly to 49.1, just above expectations of 49.0 and up from August's 48.7.