GBP/USD: Brief break of trend lows as US wage inflation picks up

GBP/USD has seen an initial downside move in response to the US Non-Farm Payrolls report, briefly breaking recent trend lows at 1.3050, although so far failing to gather enough follow through to find acceptance below the mid-round number. 

US NFP: Focus on wages

While the NFP headline number came much worse-than-expected at -33k vs median 80k, the average hourly earnings number jumped to 0.5% vs median 0.3% mm. The reaction in the US Dollar is suggestive of a market clearly more concerned over the rise in wage inflation rather than the headline number, perceived as a temporary hiccup, mainly due to Hurricane Irma. 

Political uncertainty weighs on the Pound this week

Sterling is en-route to record its largest weekly losses in over a year as we approach the first anniversary the Pound's flash crash. This week, the main driver behind GBP selling has been the political uncertainty in the UK, which clouds the outlook for successful resolutions of the multiple critical accords the UK must yet to reach with the EU. UK Prime Minister Theresa May's potential resignation and a Conservative leadership election, at this stage only vague rumours, have taken its toll in the Pound. 

GBP/USD technicals

According to Valeria Bednarik, Chief Analyst at FXStreet: "From the current level, the pair has a strong support in the 1.3030 region, with a break below exposing the 1.2990/1.3000 region. Below this last, the downward risk will likely increase, with the pair then poised to extend its decline during the upcoming sessions towards 1.2830. A recovery above 1.3100, on the other hand, could see the pair correct up to the 1.3150/60 region, while beyond this last, an approach to 1.3200 in on the cards."