- 1$1.3500 8-week high · ResistanceAlmost eight-week high and clearest upside test for buyers
- 2$1.3400 Immediate supportKey psychological level tested where sterling found buyers Friday
- 3$1.3395 Friday low · SupportLower bound of first support zone where buyers emerged
- 4$1.3463 Friday high · ResistanceEarly Friday high that sterling must clear first on upside
- 5$1.3347 20-day SMA · Support20-day simple moving average in focus on a breakdown
TradingView Lightweight Charts™ · Yahoo Finance data
GBP/USD was trading at 1.3406 at 08:11 GMT on Friday, November 6, down 0.31% as the US dollar firmed ahead of the October jobs report. Sterling traded as low as 1.3395, briefly slipping below 1.3400 a day after the Bank of England raised interest rates.
Why Is the Pound Falling After the Bank of England Rate Hike?
The Bank of England raised its benchmark rate by 25 basis points to 4.00% on Thursday. The increase was widely anticipated, so the decision gave traders little reason to revise their expectations for UK interest rates. By Friday morning, the pound had retreated from near 1.3500, an almost eight-week high.
An expected rate hike can help explain why a currency rallied before the decision. For that rally to extend, traders generally need a reason to expect rates to rise further or stay high for longer. On Friday, the next piece of evidence was coming from the US, where a stronger jobs report could lift expectations for Federal Reserve rates and make it harder for sterling to recover.
US Nonfarm Payrolls Today: What to Expect From the October Jobs Report
The October US jobs report is due at 13:30 GMT (8:30 a.m. New York time) on Friday, November 6. Economists expect employers to have added 65,000 to 70,000 jobs, up from the 29,000 initially reported for September.
A pickup in hiring is already expected, so the dollar may need a clear beat to extend its gains against the pound. Strong hiring and firm wage growth would give the Federal Reserve more room to keep rates high. But if unemployment rises or earlier job gains are revised lower, even a headline beat could give the dollar only a brief lift.
Why the US Midterm Results Matter for GBP/USD
The Democrats’ victory in the US midterm elections was followed by a sharp fall in crude oil. Reuters reported that traders were weighing whether the result could hasten an end to the US-Israeli war with Iran. Brent fell 8.7% on Wednesday and traded near $93.50 a barrel on Thursday.
For sterling, the drop in oil prices complicates the story behind the Bank of England’s rate hike. If cheaper energy takes some pressure off UK inflation, traders may see less need for another increase. In the US, the same decline could ease inflation concerns, but a firm jobs report could still keep Treasury yields elevated and support the dollar.
GBP/USD Technical Outlook: Can Sterling Reclaim 1.3500?
The first test is 1.3395–1.3400, where sterling found buyers early on Friday. A break below that area would put the 20-day simple moving average near 1.3347 in focus. The pound was still above that average at 08:11 GMT, so the morning decline had yet to erase the broader rebound.
On the upside, sterling would first need to clear Friday’s early high of 1.3463. That would bring 1.3500 back into view. The pair had already turned lower from around that level, making it the clearest test of whether buyers can regain control after payrolls.
GBP/USD Outlook: What Matters After NFP?
The Bank of England has already raised rates to 4%. For the pound, the question now is whether the next UK inflation figures give it a reason to go further. If energy prices stay lower and inflation eases, some of the support sterling drew from expectations of higher rates could fade.
In the US, the election has shifted expectations about the war, and oil prices have already reacted. The dollar’s next move may depend more on whether US Treasury yields hold up after payrolls. If yields stay firm while traders pare back bets on another UK hike, sterling could struggle to recover. If US yields fall and UK inflation stays stubborn, the pound has a better chance of making up Friday’s losses.
Traders had largely anticipated the hike. With the decision offering little surprise, Friday’s US jobs report was the next event likely to change expectations for the gap between UK and US rates.
The November 6 release covers October. September’s reported gain of 29,000 jobs is the comparison figure and could be revised in the new release.
A stronger-than-expected jobs report could lift the dollar and put GBP/USD back below 1.3400, especially if US Treasury yields rise. A weaker report could help sterling recover toward 1.3500. Wage growth, unemployment and revisions can change the reaction even if the headline jobs number beats forecasts.
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Anonymous · no sign-up · results from the last 30 days · not investment advice