GBP/USD tests 1.35 as Cable tilts upward

• GBP/USD found cautious gains on Wednesday after testing the 1.3500 handle.
• Overall market momentum remains limited as investors strain to brush off a US government shutdown.
• Key labor and inflation from the BLS may be delayed or suspended at a critical rate-watching juncture.

GBP/USD eased into a fourth straight bullish session, briefly tapping the 1.3500 handle before settling back to a sedate 0.27% gain for the day's market sessions. Cable traders now head into an ueasy back half of the trading week, with a US government shutdown threatening the flow of high quality official labor and inflation data, as well as a notable lack of meaningful economic data releases on the UK side.

The US federal government is now in shutdown mode, with Congress unable to muscle a budget spending bill across the line before the regular start of the fiscal year on October 1, which occurs every single year and should come as no surprise to policymakers in Washington. Democrats have introduced two separate budget reconciliation bills this week, but House Republicans responded by skipping all budget meetings and remaining absent during two separate bill readings that would have provided a stopgap funding solution while a larger budget bill is considered.

Federal shutdowns have almost become the norm rather than the exception during Trump's presidency: This will be the fourth federal shutdown over budget disagreements that Trump has presided over across his two terms. The last federal shutdown, which occurred in 2018, lasted for 35 consecutive days and remains the longest government closure in US history. Donald Trump has a long-standing history of stating that any government shutdown is the fault of the president, as he declared in 2013 and 2011 by saying, "problems start from the top, and they have to get solved from the top and the president's the leader... he's got to get everybody in the room and he's got to lead."

ADP Employment Change figures came in much lower than the street expected, showing a contraction of -32K in September versus the expected 50K. August's initial print of 54K was also revised sharply lower to -3K. ADP jobs figures suffer from constant revisions, but the figure has generally missed expectations for all but three of the monthly figures published since the start of 2025.

The Bureau of Labor Statistics (BLS) is poised to delay or suspend the release of September's Nonfarm Payrolls (NFP) jobs report that was slated for this week. Initially due on Friday, the closure of the US federal government has made it difficult, if not impossible, for official data services to conduct regular operations. The NFP suspension comes at a time when markets are closely watching official labor data to suss out the Federal Reserve's (Fed) expected pace of rate cuts through the remainder of the year.

With the NFP print in jeopardy, investors are leaning further on private data such as ADP. According to the CME's FedWatch Tool, rate trader bets of another quarter-point interest rate cut on October 29 surged to 99% post-ADP on Wednesday. Rate markets are also pricing in nearly 90% odds of a third-straight rate trim on December 10, and a further 93% that the Fed will deliver a fourth interest rate cut by next April at the absolute latest.

GBP/USD daily chart