- Sustained USD buying dragged GBP/USD lower during the early American session.
- The US NFP report reaffirmed the Fed’s rate hike bets and continued to support the dollar.
- Risk appetite could cap the safe haven USD and help limit deeper losses for the pair.
The GBP/USD pair saw some selling during the early American session and fell to a fresh daily low near 1.3100 after the release of the US jobs report.
The NFP headline showed the US economy added 431,000 jobs in March, less than the 490,000 expected. However, the disappointment was largely offset by an upward revision to the previous month’s reading to 750,000 from 678,000 previously reported. In addition, the unemployment rate fell to 3.6% from 3.8% previously, while the median hourly wage increased by 0.4% month-on-month compared to an upwardly revised 0.1% in February.
There were no big surprises in the report, although the details reinforced market bets that the Fed would raise interest rates by 100 bps over the next two meetings. This, in turn, pushed up US Treasury yields and continued to support the US dollar, putting some downward pressure on GBP/USD. That said, a positive risk tone capped off the safe haven dollar and extended some support to the pair.
The bulls have so far managed to defend the round 1.3100 level, which should now act as a pivotal point. A convincing break below would expose the weekly low around 1.3050. Some follow-on selling would make the GBP/USD pair vulnerable to accelerating the decline to the yearly low around the key psychological 1.3000 level.
With key data out of the way, the market focus turns to new developments surrounding the Russia-Ukraine saga. Investors remain optimistic about the possibility of a breakthrough in the Russia-Ukraine peace talks and a diplomatic solution to end the road. This was evident from a nice move up in the equity markets.
Therefore, incoming geopolitical headlines will continue to play a key role in influencing broader market risk sentiment. This coupled with US bond yields will fuel USD demand and produce some trading opportunities around the GBP/USD pair on the last day of the week.
Technical levels
Source: Fx Street
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