fix issue

Author: meganrogge

src/vs/workbench/contrib/terminal/browser/terminalInstance.ts

@@ -779,7 +779,7 @@ export class TerminalInstance extends Disposable implements ITerminalInstance {
 			capabilities: this.capabilities,
 			shellIntegrationNonce: this._processManager.shellIntegrationNonce,
 			disableShellIntegrationReporting,
-			initialCwd: this._cwd,
+			initialCwd: this.shellLaunchConfig.attachPersistentProcess?.cwd,
 		});
 		this.xterm = xterm;
 		this._resizeDebouncer = this._register(new TerminalResizeDebouncer(

src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts

@@ -278,7 +278,7 @@ export class XtermTerminal extends Disposable implements IXtermTerminal, IDetach
 		this._register(this._decorationAddon.onDidRequestRunCommand(e => this._onDidRequestRunCommand.fire(e)));
 		this._register(this._decorationAddon.onDidRequestCopyAsHtml(e => this._onDidRequestCopyAsHtml.fire(e)));
 		this.raw.loadAddon(this._decorationAddon);
-		this._shellIntegrationAddon = new ShellIntegrationAddon(options.shellIntegrationNonce ?? '', options.disableShellIntegrationReporting, undefined, this._telemetryService, this._logService);
+		this._shellIntegrationAddon = new ShellIntegrationAddon(options.shellIntegrationNonce ?? '', options.disableShellIntegrationReporting, options.initialCwd, this._telemetryService, this._logService);
 		this.raw.loadAddon(this._shellIntegrationAddon);
 		this._xtermAddonLoader.importAddon('clipboard').then(ClipboardAddon => {
 			if (this._store.isDisposed) {