GBP/USD hangs near weekly lows, just above mid-1.3800s
|- GBP/USD witnessed some follow-through selling on Friday amid a broad-based USD strength.
- The downside seems limited as the focus shifts to the release of the US monthly jobs report.
The GBP/USD pair witnessed some selling during the early European session and dropped to the lower end of its weekly trading range, around the 1.3860 region in the last hour.
Following a brief consolidation through the early part of the trading action on Friday, the pair met with some fresh supply and extended the previous day's retracement slide from weekly tops. The GBP/USD pair continued with its struggle to find acceptance above the key 1.4000 psychological mark and witnessed a dramatic turnaround on Thursday amid the Powell-inspired rally in the US dollar.
The Fed Chair Jerome Powell – speaking at an online event hosted by the Wall Street Journal – said that the recent surge in the US Treasury bond yields was not a disorderly move. Powell's remarks disappointed some investors anticipating immediate action to curb a sharp rise in long-term yields. This, in turn, triggered a sell-off in the fixed income market and boosted the USD demand.
This comes on the back of the optimistic outlook for the US economic recovery, which has been fueling speculations for a possible rise in inflation. Apart from this, expectations for a larger government borrowing to fund a massive $1.9 trillion fiscal stimulus package continued pushing the US bond yields higher and lifted the key USD index to three-month tops on the last trading day of the week.
That said, the downside remains cushioned, at least for now, as investors now seemed reluctant to place aggressive bets, rather preferred to wait on the sidelines ahead of the US jobs data. The closely watched NFP report is scheduled for release later during the early North American session, which will influence the USD price dynamics and provide some meaningful impetus to the GBP/USD pair.
From a technical perspective, repeated failed attempts to conquer the 1.4000 mark and acceptance below the 1.3900 level favours bearish traders. Some follow-through selling below mid-1.3800s will reaffirm the negative outlook and set the stage for an extension of the GBP/USD pair's recent sharp corrective slide from the vicinity of mid-1.4200s, or near three-year tops touched on February 24.
Technical levels to watch
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