British Pound cracks 1.3400 as blowout US NFP revive Fed hike bets

• GBP/USD plunges nearly 0.60% to 1.3371, breaking below 1.3400.
• US payrolls surge 165K versus 65K expected; unemployment falls to 4.1%.
• BoE tightening fails to support Sterling despite prospects of further hikes.

The Pound Sterling dives by nearly 0.60% against the US Dollar as a stellar US Nonfarm Payrolls report indicates that the labour market is solid and clears the path for additional tightening by the Federal Reserve (Fed). The GBP/USD trades at 1.3371 after peaking near 1.3463.

GBP/USD tumbles on strong NFP, reinforcing Fed tightening expectations

US Nonfarm Payrolls in October exceeded estimates of 65K, rising by 165K, while figures from September were upwardly revised from 29K to 60K. The report lowered the Unemployment Rate to 4.1%, as employers added jobs across sectors.

Recently, the University of Michigan reported that Consumer Sentiment in November exceeded the forecasts and the previous month's print of 48, rising to 51. The survey revealed that Americans see inflation edging lower, with one-year inflation expectations at 4.3% down from 4.7% and five-year expectations at 3.4% down from 3.5%

After the data, the CME FedWatch Tool revealed that investors increased the odds for a December Fed rate hike from 67% a day ago to nearly 77%.

In geopolitics, an Iranian source said Tehran is responding positively to the latest proposal from mediators, according to Al-Arabiya. Nevertheless, tensions remain high, as unconfirmed reports indicate that a US aircraft issued an emergency notice near the coast of Oman, Tasnim reported.

St. Louis Federal Reserve (Fed) President Alberto Musalem said that “people remain concerned about inflation at the current level,” adding that inflation expectations remain anchored and that current excess inflation is due to energy shocks and the AI buildout.

In the UK, the Bank of England (BoE) rate hike was a tailwind for GBP/USD, but failure of a decisive breakout above 1.3500 exacerbated the Pound’s fall beneath 1.3400 during Friday’s session.

However, Cable sellers are not out of the woods as the BoE hinted at another potential rate increase, even though they don’t see clear evidence of second-round inflation effects. Additionally, the BoE revealed that a potential US-Iran peace deal would be positive for the economy but warned that it may not be sufficient to bring inflation down.

Next week, speeches by BoE officials and the release of UK GDP figures could rock the boat. In the US, the release of CPI figures, jobless claims, and Fed officials' comments can influence the direction of the GBP/USD pair.

GBP/USD Price Forecast: Technica outlook

In the daily chart, GBP/USD trades at 1.3368, holding just above the cluster of the 50/100/200-day simple moving averages (SMA) around 1.3362, which now acts as immediate support. Price action sits marginally beneath a descending resistance trend line break at 1.3381, leaving the near-term bias neutral as the pair oscillates around its key averages, while the Relative Strength Index (14) at 50.77 reinforces a consolidative tone rather than a directional push.

On the topside, initial resistance is located at the downward-sloping trend line break at 1.3381, with subsequent barriers emerging at the former rising support trend lines whose break prices stand at 1.3684 and 1.3855. On the downside, immediate support is provided by the triple SMA cluster near 1.3362, ahead of a more distant structural floor at the prior resistance trend line break around 1.3235, where buyers would be expected to reassert if the pair extends a pullback.

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