GBP/USD sees a further downside to near 1.2200 as anxiety soars ahead of US NFP

GBP/USD is expected to continue its downside journey to near 1.2200 as focus shifts to US NFP data.
To tame double-digit inflation, the BOE pushed interest rates by 50 bps to 4%.
Investors will keep an eye on US Average Hourly Earnings data for further guidance.

Sagar Dua FXStreet

The GBP/USD pair has shown a vertical sell-off to near 1.2225 and is expected to continue its downside journey to near the round-level support of 1.2200 ahead. The Cable witnessed a massive sell-off after investors shrugged off expectations that the Federal Reserve (Fed) will pause policy tightening ahead and poured funds into the US Dollar Index (DXY). Apart from that, investors dumped the Pound Sterling despite the Bank of England (BoE) continuing its hawkish stance on interest rates.

On Thursday, the USD Index recovered firmly after building a cushion around 100.50. The extremely oversold condition of the USD Index triggered buying interest among the market participants. The USD Index soared above 101.50 and has now turned sideways below 101.40 ahead of the United States Nonfarm Payrolls (NFP) data for further guidance.

To tame the double-digit inflation figure, BOE Governor Andrew Bailey announced an interest rate hike by 50 basis points (bps), which pushed borrowing rates to 4%. The BoE was an early adopter that started contracting its monetary policy after the pandemic period and has now announced its 10^th consecutive interest rate hike. However, the inflation rate is still double-digit amid rising wage rates due to squeezed labor supply. Also, the softening energy prices are offset by the rising food price index, which was recorded at 16.8% for December.

There is no denying the fact that BoE policymakers have done much with interest rates to decelerate inflation, however, the United Kingdom economy is not responding, as expected, to extreme policy tightening.

On Friday, the release of the US NFP data will be of utmost importance. According to the consensus, the United States economy has added 185K jobs in the labor market in January vs. the former release of 223K in times when labor demand is exceeding supply. The Unemployment Rate is seen at 3.6% vs. 3.5% released earlier. The catalyst that will be critically monitored by investors for further action will be the Average Hourly Earnings data.

GBP/USD

Overview
Today last price	1.2231
Today Daily Change	-0.0143
Today Daily Change %	-1.16
Today daily open	1.2374

Trends
Daily SMA20	1.2274
Daily SMA50	1.2188
Daily SMA100	1.179
Daily SMA200	1.1959

Levels
Previous Daily High	1.2395
Previous Daily Low	1.2272
Previous Weekly High	1.2448
Previous Weekly Low	1.2263
Previous Monthly High	1.2448
Previous Monthly Low	1.1841
Daily Fibonacci 38.2%	1.2348
Daily Fibonacci 61.8%	1.2319
Daily Pivot Point S1	1.2299
Daily Pivot Point S2	1.2224
Daily Pivot Point S3	1.2177
Daily Pivot Point R1	1.2422
Daily Pivot Point R2	1.247
Daily Pivot Point R3	1.2545

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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