GBP/USD slammed below 1.3100, what’s next?

Having breached 1.3100 levels for the first in four-weeks in Asia, the GBP/USD pair entered a phase of consolidation, as investors brace for the US NFP report for the next direction.

GBP/USD: Focus on NFP

The spot is seen trading depressed just below 1.31 handle, as we head towards the early European trading, with the US dollar sitting at seven-week tops reached against its main competitors.

The sentiment around the greenback remains broadly underpinned, as the bulls continue to cheer the recent series of upbeat US macro data, which bolster the odds of a Dec Fed rate hike.

Additionally, Cable also suffers from renewed tensions hitting the UK’s political environment, with Conservatives Party members urging the UK PM Theresa May to step down from her position, as they raise doubts over her approach towards the Brexit deal.

Also, rumor mills are doing the rounds that May has no issue resigning. However, Sky News soon clarified that she is not resigning.

Meanwhile, divergent monetary policy outlooks between the Fed and BOE also continue to weigh down on the pound, as the Fed remains on track for a rate hike this year and three more next year.

All eyes now remain focused on the US NFP data, which will reinforce the Fed’s hawkish bias in the months ahead. In the meantime, markets will also closely hear comments from the BOE MPC member and Chief Economist Haldane.

GBP/USD Preferred Strategy

FXStreet Chief Analyst Valeria Bednarik noted, "from a technical point of view, the pair is biased lower, holding near the mentioned low at the end of the day, and with the 4 hours chart showing that the 20 SMA accelerates south below the 200 EMA, both well above the current level. In the same chart, the Momentum indicator turned flat within negative territory, but the RSI maintains its bearish slope, currently around 20. A downward acceleration below the mentioned daily low, will open doors for an extension towards the 1.3000 critical threshold for this Friday."