Blowout US NFP rekindle Fed hike bets as British Pound breaks 1.3400

• A decline of nearly 0.60% takes GBP/USD through 1.3400 to 1.3371.
• A 165K rise in US payrolls beats the 65K forecast, while unemployment drops to 4.1%.
• Sterling finds no support from BoE tightening, even with further rate rises in prospect.

A robust US Nonfarm Payrolls report points to a resilient labour market, paving the way for further tightening by the Federal Reserve (Fed) and sending the Pound Sterling nearly 0.60% lower against the US Dollar. Having reached a high near 1.3463, GBP/USD now trades at 1.3371.

GBP/USD retreats as robust NFP strengthens expectations of Fed tightening

October US Nonfarm Payrolls increased by 165K, comfortably above the 65K forecast, while September’s reading was revised higher to 60K from 29K. With employers adding positions across sectors, the report showed the Unemployment Rate declining to 4.1%.

The latest University of Michigan survey put November Consumer Sentiment at 51, above forecasts and the previous month’s reading of 48. Americans also anticipate slightly lower inflation: one-year expectations eased to 4.3% from 4.7%, while the five-year measure slipped to 3.4% from 3.5%.

Following the releases, investors assigned a nearly 77% probability to a December Fed rate rise, up from 67% a day earlier, according to the CME FedWatch Tool.

On the geopolitical front, Al-Arabiya cited an Iranian source as saying that Tehran was responding favourably to mediators’ latest proposal. Tensions nonetheless remain elevated. Tasnim reported unconfirmed accounts that a US aircraft had issued an emergency notice off the coast of Oman.

According to St. Louis Federal Reserve (Fed) President Alberto Musalem, “people remain concerned about inflation at the current level,” although inflation expectations remain anchored. He attributed the current excess inflation to energy shocks and the AI buildout.

Although the Bank of England (BoE) rate rise provided support for GBP/USD, the pair’s inability to break decisively above 1.3500 compounded Sterling’s slide below 1.3400 in Friday’s trading.

Risks nevertheless remain for Cable sellers: the BoE signalled that another rate rise was possible, despite seeing no clear evidence of second-round inflation effects. The central bank also indicated that a potential US-Iran peace agreement would benefit the economy, while cautioning that it might not be enough to lower inflation.

UK GDP data and speeches from BoE officials could unsettle markets next week. Across the Atlantic, CPI releases, jobless claims and remarks from Fed officials could shape GBP/USD’s direction.

GBP/USD Price Forecast: Pair consolidates around key technical levels

At 1.3368 on the daily chart, GBP/USD remains just above the 50/100/200-day simple moving averages (SMA), grouped around 1.3362 and providing immediate support. Trading slightly below the descending resistance trend line break at 1.3381, the pair retains a neutral near-term bias as it fluctuates around these key averages. A Relative Strength Index (14) reading of 50.77 also points to consolidation rather than a sustained directional move.

The descending trend line break at 1.3381 marks the first resistance level. Beyond it, the former rising support trend lines present further obstacles, with break prices of 1.3684 and 1.3855. Support initially lies at the three-SMA cluster near 1.3362. A deeper pullback would bring the more distant structural floor around 1.3235 into view, at the previous resistance trend line break, where buyers would be expected to return.

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