GBP/USD looks to close the week in the red near the 1.34 handle

Following yesterday's sharp recovery rise, the GBP/USD pair failed to hold above the 1.35 handle on Friday and erased yesterday's gains. As of writing, the pair was trading at 1.3396, dropping 0.58%, or 78 pips on the day.

Earlier today, Bloomberg, citing EU officials, reported that Brexit trade talks wouldn't start immediately in 2018 and it wouldn't be realistic to see a trade deal being finalized before March of 2019. Moreover, the EU’s Chief Brexit Negotiator Barnier told reporters that the real trade negotiations would start after Brexit treaty had been signed. The uncertainty surrounding the negotiations hurt the demand for the GBP during the first half of the day.

Later in the session, the pair came under a renewed selling pressure after the employment report from the United States allowed the greenback to preserve its strength against its peers. According to the data released by the U.S. Bureau of Labor Statistics, total nonfarm payroll employment increased by 228,000 on a monthly basis in November. Further details of the report revealed that wage inflation on an annual basis increased by 2.7% and fell short of the market's expectation of 2.7%. Although the initial reaction weighed on the greenback, the US Dollar Index easily recovered its losses and is now looking to end the second week in a row higher around the 94 handle.

Commenting on the report, "wage growth was disappointing, but given the sheer strength of the jobs market, we would still expect pay to accelerate gradually through next year. More broadly, we agree with the Fed's assertion that most of this year's inflation dip was transitory," ING analysts wrote in a recent article.

Technical outlook

The pair could encounter the first technical support at 1.3355 (daily low/20-DMA) followed by 1.3250 (50-DMA) and 1.3200 (100-DMA/psychological level). On the upside, resistances align at 1.3500 (psychological level), 1.3550 (Nov. 30 high) and 1.3630 (Sep. 20 high).