GBP/USD drops 240 pips from yesterday’s highs, affected by BoE and NFP

The slide of GBP/USD continued during the American session and it found support slightly above the 1.3000 zone. The pair bottomed at 1.3024, the lowest in a week. It remains near the lows, down for the week. 

From yesterday’s highs cable dropped more than 200 pips. On Thursday it was the Bank of England decision and on Friday, the US jobs report, the events that sent the pair sharply to the downside. The combination of a not “hawkish” BoE and a better-than-expected NFP widened UK and US monetary policy expectation, favoring the greenback. 

The move was also supported on Friday by a rally of the US dollar. The Dollar Index is having the best day in months. It surged from 92.55 to 93.60, reaching a 1-week high. 

GBP/USD levels to consider

The slide of the last two days pushed the price below the 20-day moving average and also under the 1.3050 area, signaling potential weakness ahead. The weekly chart shows a rejection from above 1.3140. 

Over the next days, will be relevant to see where GBP/USD goes. If the recent decline is confirm, that would open the doors for an extension of the correction. If the pair reverses back to the upside and climbs above 1.3150, the pound is likely to recover momentum. 

To the downside, under 1.3020, support levels might be located at 1.3000 (psychological) and 1.2950. On the upside, immediate resistance could be seen at 1.3050 (Jul 27 low), 1.3110 (Aug 3 low) and 1.3150/60 (Aug 4 high).