The Pound Sterling (GBP) tumbled to 1.2600 on Friday after a robust US Nonfarm Payrolls (NFP) report fueled demand for the US Dollar (USD).

US Jobs Data: Strength Surprises Markets

March’s NFP figures showed 303K jobs added, significantly surpassing the 200K forecast and the downwardly revised February figure of 270K. The Unemployment Rate dropped to 3.8%, beating expectations. While monthly wage growth met expectations, annual growth slowed to 4.1% as anticipated.

Impact on Fed Outlook

The strong jobs data strengthens the case for the Federal Reserve (Fed) to maintain higher interest rates for longer, dampening expectations for rate cuts in the near term. Minneapolis Fed President Neel Kashkari emphasized this outlook, stating rate cuts wouldn’t be needed this year if inflation remains controlled. He projects two rate cuts in 2024.

UK Outlook: Easing Inflation Expectations Weigh on GBP

The Bank of England’s (BoE) latest Decision Maker Panel (DMP) survey signals cooling inflation expectations within the UK. Survey respondents anticipate lower selling prices and wage growth over the next year, with expectations dropping to 4.1% and 4.9% respectively. This supports speculation for BoE rate cuts as early as June, putting downward pressure on the Pound Sterling.

Technical Outlook: GBP/USD Faces Selling Pressure

After retreating from its two-week high of 1.2680, the GBP/USD pair struggles to stay above the 20-day and 50-day Exponential Moving Averages (EMAs) converging around 1.2660. The 200-day EMA near 1.2566 offers support. Key resistance lies near the eight-month high of 1.2900.

The 14-period Relative Strength Index (RSI) has rebounded above 40.00, but a decisive break above 60.00 is needed to confirm a bullish reversal.