Modified: Wednesday, 2 September 2026 11:16 BST

– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Recovers as Weak US Data Hits the Dollar

The Pound US Dollar (GBP/USD) exchange rate recovered some ground through the latter part of Tuesday’s session as weaker-than-expected US data undermined demand for the ‘Greenback’.

At the time of writing, GBP/USD was trading at around $1.3546, little changed from Tuesday’s opening levels.

The US Dollar (USD) initially found support on Tuesday, with renewed tensions between the US and Iran prompting a bout of safe-haven demand.

The latest exchange of strikes marked the first direct hostilities between the two sides in several weeks, helping to drive another sharp increase in oil prices and adding to market uncertainty.

The ‘Greenback’ subsequently surrendered these gains, however, after a pair of disappointing US economic releases raised fresh concerns over the health of the world’s largest economy.

The latest ISM manufacturing PMI and July’s JOLTs job openings both fell short of expectations. The weakness in the jobs data was particularly significant for USD investors, as evidence of a cooling labour market could make the Federal Reserve more reluctant to raise interest rates in the months ahead.

The Pound (GBP) was largely rangebound against its major counterparts on Tuesday as UK markets reopened following the bank holiday against a backdrop of sharply higher borrowing costs.

The benchmark 10-year gilt yield climbed to around 5.24%, its highest level since 2008, as rising oil prices and renewed inflation concerns prompted investors to reassess the outlook for UK monetary policy.

Higher energy costs could force the Bank of England (BoE) to keep interest rates elevated for longer, although the prospect of tighter policy offered little immediate support to Sterling.

An upward revision to the UK’s August manufacturing PMI also failed to generate much interest, with the latest improvement largely overlooked by currency markets.

Near-Term GBP/USD Forecast: ADP Figures to Set the Tone for USD?

Looking ahead to Wednesday, the Pound to US Dollar (GBP/USD) exchange rate may be influenced by the release of the latest US ADP employment report.

Economists expect August’s figures to show that private-sector hiring remained subdued. A weak reading could weigh on the US Dollar by reinforcing expectations that Friday’s non-farm payrolls report may also disappoint.

With the UK economic calendar offering little of significance, Sterling is likely to take its direction from broader market sentiment and developments elsewhere in the currency market.

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TAGS: Pound Dollar Forecasts