GBP/USD Stumbles: Critical Retreat from 1.3700 Highs Ahead of Pivotal NFP Data

BitcoinWorld GBP/USD Stumbles: Critical Retreat from 1.3700 Highs Ahead of Pivotal NFP Data LONDON, March 7, 2025 – The GBP/USD currency pair, commonly known as ‘Cable,’ has notably eased from its weekly peaks above the 1.3700 psychological threshold. Consequently, market participants are now squarely focusing on the imminent release of the US Non-Farm Payrolls (NFP) report, a data point historically capable of triggering significant forex volatility. This pre-data pullback reflects a classic market behavior of position squaring and risk reduction. GBP/USD Technical Chart Analysis Reveals Key Levels Technical analysis of the GBP/USD charts provides clear context for the current retreat. The pair recently tested a multi-week resistance zone between 1.3720 and 1.3750, an area that previously acted as support in early February. Following this test, selling pressure emerged, pushing the rate back towards the 1.3650 handle. Furthermore, the 50-day simple moving average (SMA), currently near 1.3620, now serves as immediate dynamic support. A sustained break below this level could signal a deeper correction. Meanwhile, the Relative Strength Index (RSI) on the 4-hour chart has retreated from overbought territory above 70, indicating a healthy cooldown from recent bullish momentum. Understanding the Pre-NFP Squeeze Market veterans often observe a ‘calm before the storm’ in forex markets ahead of high-impact events like the NFP. Traders typically lighten exposure to avoid unpredictable gaps. This activity frequently creates the exact price action witnessed: a retreat from recent extremes. Notably, trading volumes in Cable futures often dip in the 24 hours preceding the report, confirming this risk-off behavior. The Overwhelming Influence of Non-Farm Payrolls Data The US Non-Farm Payrolls report, issued monthly by the Bureau of Labor Statistics, remains the single most influential piece of economic data for global currency markets. It directly impacts Federal Reserve policy expectations, which drive US Dollar valuation. A stronger-than-expected jobs number typically boosts the USD as it suggests a resilient economy, potentially requiring tighter monetary policy. Conversely, a weak report can weaken the Dollar by pushing back expectations for interest rate hikes. The market’s consensus forecast for the upcoming report will set the benchmark; any deviation creates immediate directional force. Key NFP Components Traders Watch: Headline Job Creation: The net number of new jobs added outside the farming sector. Unemployment Rate: The percentage of the labor force actively seeking work. Average Hourly Earnings (Wage Growth): A critical inflation indicator monitored closely by the Fed. Recent GBP/USD Reaction to NFP Surprises NFP Release Date Actual vs. Forecast GBP/USD 1-Hour Move February 2025 +225K vs. +200K -85 pips January 2025 +180K vs. +210K +120 pips December 2024 +199K vs. +190K -45 pips Fundamental Drivers for the British Pound While the USD side of the equation dominates short-term action, Sterling has its own fundamental narrative. The Bank of England’s (BoE) monetary policy path relative to the Fed’s remains a primary driver. Recent UK inflation data showing persistent core pressures has kept expectations for BoE policy moderately hawkish. However, concerns about UK economic growth momentum have created a balancing act. Additionally, geopolitical developments and trade flow data continue to provide underlying support or resistance for the Pound. Analysts from major financial institutions, including HSBC and Barclays, consistently highlight this transatlantic policy divergence as Cable’s core multi-month theme. Expert Insight on Market Positioning According to Commitments of Traders (COT) reports published by the CFTC, speculative net positioning in GBP futures had recently shifted to its most bullish level in several months. This crowded long position, in fact, made the pair vulnerable to a ‘long squeeze’ on any negative catalyst or pre-event profit-taking. This data-driven perspective explains why the retreat from 1.3700 was both technically logical and fundamentally anticipated by seasoned analysts monitoring market sentiment extremes. Potential Scenarios Following the NFP Release The market’s path post-data will depend heavily on the NFP outcome relative to expectations. A significantly strong report across all metrics (jobs, wages, unemployment) would likely propel the US Dollar higher, potentially pushing GBP/USD to test and break below the 1.3600 support cluster. Alternatively, a weak report could see the pair swiftly reclaim the 1.3700 level and target the next resistance near 1.3780. A mixed report—for instance, strong jobs but weak wages—could lead to choppy, range-bound trading as markets dissect the implications for inflation versus growth. Critical Technical Levels to Monitor: Immediate Resistance: 1.3700 – 1.3720 (previous weekly high) Key Support: 1.3620 (50-day SMA) followed by 1.3580 (February low) Bullish Breakout Target: 1.3780 (Late January high) Bearish Breakout Target: 1.3500 (Major psychological level) Conclusion The GBP/USD pair’s easing from weekly highs above 1.3700 represents a textbook market adjustment ahead of a high-risk economic event. This movement, clearly visible on technical charts, underscores the forex market’s sensitivity to US labor data. The upcoming Non-Farm Payrolls report will provide the fundamental catalyst that determines whether this retreat becomes a deeper correction or merely a pause within a broader bullish trend. Traders and analysts alike will scrutinize every data point, understanding that the resulting volatility will redefine short-term directional bias for Cable and other major currency pairs. FAQs Q1: Why is the GBP/USD pair called ‘Cable’? The nickname ‘Cable’ originates from the transatlantic telegraph cable laid across the Atlantic Ocean in the mid-19th century, which was used to transmit exchange rates between London and New York. Q2: What time is the US Non-Farm Payrolls report released? The report is typically released at 8:30 AM Eastern Time (ET) on the first Friday of every month by the U.S. Bureau of Labor Statistics. Q3: How does a strong NFP report typically affect GBP/USD? A strong NFP report generally strengthens the US Dollar as it suggests a robust economy, potentially leading to tighter Federal Reserve policy. This typically causes the GBP/USD exchange rate to fall. Q4: Besides the NFP, what other data moves the GBP/USD pair? Key data includes UK and US inflation (CPI), central bank interest rate decisions and meeting minutes (BoE and Fed), GDP growth figures, and retail sales data from both economies. Q5: What is the significance of the 1.3700 level for GBP/USD? The 1.3700 level is a major psychological and technical round number. It has acted as both significant support and resistance in recent history, making it a key focal point for trader sentiment and order flow. This post GBP/USD Stumbles: Critical Retreat from 1.3700 Highs Ahead of Pivotal NFP Data first appeared on BitcoinWorld .