GBP/USD may face key resistance at 1.3500 on US NFP day

• Against the US Dollar, the British Pound's correction deepens towards 1.3425.
• September's US NFP figures are keenly awaited by investors.
• Thursday's BoE decision lifted interest rates by 25 bps to 4%.

With the United States (US) Nonfarm Payrolls (NFP) figures for October due at 13:30 GMT, a recovering US Dollar (USD) is weighing on GBP/USD. The British Pound (GBP) has extended its retreat from an almost eight-week high of 1.3500, trading lower near 1.3425 during Friday's European session.

The US Dollar Index (DXY) stands near 101.77 at the time of writing, up 0.2%. The index measures the Greenback's value against a basket of six major currencies.

Turning to the forthcoming release, MUFG/BTMU analysts say that “attention turns to today’s US nonfarm payrolls report, with markets expecting 70k jobs added in October, up from 29k in September.” In their assessment, “stronger-than-expected JOLTS and ADP data suggest a better-than-expected US labour demand, raising the risk of further Fed tightening”.

Expectations for Federal Reserve (Fed) interest rates are likely to be shaped by the US NFP release.

For sterling, Thursday brought the Bank of England's (BoE) first interest rate increase of 2026, a rise of 25 basis points (bps) that took the rate to 4%. The increase had been anticipated as a response to intensifying inflationary pressures.

GBP/USD Holds a Constructive Technical Bias

On the daily chart, the short-term outlook for GBP/USD remains constructive, with the pair trading at 1.3425. It is holding above both the 20-period Exponential Moving Average (EMA) at 1.3372 and the 50% Fibonacci retracement of the latest decline at 1.3409, indicating that buyers are defending higher levels. A Relative Strength Index (14) reading of 57 also points to a positive bias: upward momentum appears intact, although the indicator remains below overbought territory.

The first upside barrier is the 61.8% Fibonacci retracement near 1.3472. Beyond that lie the 78.6% retracement around 1.3562 and the recent cycle high area near 1.3677. Initial downside support comes from the 50% retracement at 1.3409, ahead of the 20-EMA at 1.3372. A more pronounced decline would bring the 38.2% level at 1.3345 and the 23.6% retracement near 1.3267 into view, before the stronger demand area around the 1.3140 cycle low.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)