GBP/USD trying to pump the brakes at 1.30 ahead of Friday's US NFP action

The BoE's rate hike saw limited buying for the GBP/USD as the central bank warns of a slower rate of hikes looking forward.
Friday's market focus is drifting towards the US Non-Farm Payrolls report.

Joshua Gibson FXStreet

The GBP/USD is trading just above the 1.30 major technical level after seeing a familiar sell-off pattern on Thursday.

The Bank of England (BoE) hiked their interest rate by 25 bps, but the Sterling still took a nose dive after the BoE's Governor Mark Carney suggested that the pace of future rate hikes will be incredibly slow, with the BoE projecting to engage in further rate increases around once a year. Pound traders took the rate of future hikes as a bearish sign, sending the GBP/USD sharply lower for Thursday after sending the pair into 1.3125 on reaction to the 25 bps rate hike.

Brexit concerns are also dragging on the Sterling, with EU-UK trade deal negotiations set to begin anew in a couple of weeks with UK Prime Minister Theresa May personally heading up trade negotiations, to the chagrin of her fractured ruling party within the UK parliament, with hard-line Brexiteers likely to reject any initial offers from the EU amidst calls that PM May is too willing to bow to European demands.

Friday sees the Markit Services PMI for the GBP at 08:30 GMT, forecast to come in at 54.7 versus the previous showing of 55.1, though the mid-tier indicator will be largely overshadowed by the US NFP job report, which drops on markets at 12:30 GMT to cap off a disappointing week for the Pound.

GBP/USD levels to watch

Momentum is leaning firmly towards the downside on the Sterling-Dollar pairing, and as FXStreet's own Valeria Bednarik noted, a break of the 1.3000 level will be seeing a dramatic selloff as the GBP/USD extends its current declines: "technically, the GBP/USD pair is biased lower, with room to break below the key 1.30 threshold, given that in the 4 hours chart, it is developing well below a bearish 20 SMA, while the Momentum indicator heads firmly lower within negative territory, as the RSI tries to stabilize around 29."

Support levels: 1.3010 1.2970 1.2925

Resistance levels: 1.3045 1.3085 1.3120

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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