GBP/USD reverses majority of Thursday’s strong gains

The GBP/USD pair extended US jobs report-led downslide and has now reversed majority of its gains recorded in the previous session. 

Currently trading around 1.2325-30 band, the pair came under additional selling pressure following the release of closely watched US jobs report that showed economy added 156K new jobs in December (178K expected), while the unemployment rose to 4.7% from 4.6%. Despite of the disappointing headline number, surprisingly stronger-than-expected average hourly earnings growth helped the greenback to build on to its early recovery move from Thursday's three-week low.  

Adding to this, comments from the Federal Reserve Bank of Cleveland, Loretta Mester, in an interview with Fox Business, that December NFP report was "very decent", and that three Fed rate-hike in 2017 is "reasonable", provided an additional boost to the greenback's recovery momentum.

In fact, the key US Dollar Index recovered back to 102.00 mark, albeit has retreated from session peak and might have contributed towards limiting further downslide for the GBP/USD major, at least for the time being. 

Technical levels to watch

Immediate support is pegged at 1.2300 handle, which if broken is likely to accelerate the slide towards 1.2280 horizontal support before the pair eventually drops towards 1.2240 support area. On the upside, 1.2345-50 area now becomes immediate hurdle, which if cleared might trigger a short-covering bounce back towards 1.2400 handle, with 1.2380-85 zone acting as intermediate resistance.