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Bank of England

Why the Pound Edged Up Against the Dollar on 2 October 2026

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The pound edged higher against the U.S. dollar on Friday, 2 October 2026, after U.S. September payroll growth came in well below expectations. The jobs surprise prompted traders to scale back bets on an October Federal Reserve rate hike, limiting the dollar’s support. It was a modest, dated market reaction—not evidence by itself of a lasting dollar reversal.

Why was the pound up against the dollar?

Pound Sterling Live reported GBP/USD at 1.3231 on Friday afternoon, 2 October 2026, as sterling recovered from the 1.32 area it had defended during the week. That was an intraday quote at the time, not a live rate. The immediate catalyst was the U.S. employment report: fewer jobs were added than markets had expected, weakening the case for an imminent Federal Reserve rate increase in traders’ eyes. (Pound Sterling Live, 2 October 2026)

What did the latest U.S. payrolls report show?

The U.S. Bureau of Labor Statistics’ September 2026 Employment Situation release reported an increase of 29,000 in nonfarm payroll employment. Pound Sterling Live compared that result with a 90,000 consensus forecast; the consensus is a market estimate, not a government statistic. The Associated Press also reported the 29,000 figure and contrasted it with August’s reported net hiring of 133,000. (U.S. Bureau of Labor Statistics, September 2026 Employment Situation; Associated Press)

The report also showed a 4.2% unemployment rate, up from 4.1%. Average hourly earnings rose 0.1% month over month, below the 0.3% consensus cited by Pound Sterling Live, while annual wage growth was 3.0%. The weaker-than-expected hiring and monthly wage figures helped explain why markets reassessed the likelihood of an October Fed hike. (Pound Sterling Live, 2 October 2026; Associated Press)

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How did rate expectations shift for the Fed and the Bank of England?

Pound Sterling Live reported that market pricing put the chance of an October Federal Reserve hike at about 25% on 2 October, down from around 70% a week earlier. The Associated Press gave a separate snapshot based on CME Group data: a 23% probability, down from 64% a week earlier. These are distinct, time-specific readings of market pricing, not a Fed forecast or a promise about its decision. (Pound Sterling Live, 2 October 2026; Associated Press)

The same Pound Sterling Live report said markets had priced around 19 basis points of Bank of England tightening for its 5 November meeting, compared with around 5 basis points of Fed tightening for October. That relative pricing favored sterling at the margin: traders saw more expected tightening on the UK side than on the near-term U.S. side. Neither figure was a confirmed policy action. (Pound Sterling Live, 2 October 2026)

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Does weak U.S. jobs data mean the dollar will keep falling?

No single payroll report establishes a sustained labor-market downturn or a lasting change in the dollar’s direction. The employment result was a surprise that moved near-term rate expectations; traders and policymakers still needed more evidence. September U.S. consumer-price inflation was an important upcoming input, so inflation data could alter the rate outlook again. George Brown, Senior Economist at Schroders, told Pound Sterling Live: “One softer payrolls print is unlikely to be enough to convince policymakers that the labour market is undergoing a sustained deterioration.” (Pound Sterling Live, 2 October 2026)

For anyone exchanging pounds and dollars, the reported 1.3231 level is historical, not a quote to use for a transaction. Check a live rate and compare the full fee, delivery time and rate certainty offered by the provider before sending money.

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