GBP/USD forecast after the strong US NFP data

The remarkable sell-off of the GBP/USD pair accelerated on Friday after the US published strong non-farm payrolls (NFP) data. The pair sank to a low of 1.3420, which was the lowest level since October 1.

US non-farm payrolls data

The British pound has become one of the worst-performing G7 currencies this week. Indeed, the currency is on track for its worst performance since August. 

The sell-off accelerated on Thursday when the Bank of England (BOE) delivered a relatively dovish interest rate decision. The bank voted 6-3 to maintain interest rates at the current level of 0.10%. 

Analysts were expecting the gap between the members will be relatively narrow. They also voted by 7-2 to continue with the quantitative easing program.

The decision was contrary to what the Federal Reserve did on Wednesday. In its decision, the bank decided to hold interest rates steady. But the members also decided to start tapering the asset purchase program.

The GBP/USD sell-off accelerated on Friday when the US published strong non-farm payrolls (NFP) data. According to the Bureau of Labour Statistics (BLS), the American economy created more than 531k jobs in October. This was a better performance than the previous month’s 312k and the median estimate of 450k.

The data showed that the private sector was the main driver for the strong jobs numbers. Private payrolls increased by 604k while government payrolls fell by 73k. 

Meanwhile, the unemployment rate declined from 4.8% in September to a pandemic era low of 4.6%. This was a better performance than the median estimate of 4.7%. 

Wages also did relatively well. In total, the average hourly earnings rose from 4.6% to 4.9% while the number of hours declined to 34.7. 

GBP/USD forecast

The daily chart shows that the GBP/USD pair has been in a deep sell-off in the past few days. The pair declined below the 50% Fibonacci retracement level. This is a sign that bears are in control. At the same time, it moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a deep downward trend.

Therefore, the pair will likely keep falling as bears target the 61.8% Fibonacci retracement level at 1.3280. This view will be invalidated if the price moves above the 38.2% retracement level at 1.3650.